Hospital C-suite leaders told Becker's that time will tell whether General Catalyst's acquisition of an Ohio health system is the future of healthcare — but they are paying close attention.
The venture capital firm said Jan. 17 it agreed to purchase Summa Health, a three-hospital system based in Akron, and turn it into a for-profit entity. The arrangement is part of General Catalyst's Health Assurance Transformation Corp., or HATCo, run by Marc Harrison, MD, the former president and CEO of Salt Lake City-based Intermountain Health.
"Hats off to HATCo!" said Aaron Miri, chief digital and information officer of Jacksonville, Fla.-based Baptist Health. "I commend General Catalyst and Summa Health for taking a giant leap of faith into uncharted waters. I do think you will see more of these kinds of relationships once HATCo successfully navigates the regulatory, medical staff, patient experience, payer relations and other dynamics that every health system has to navigate. There's a tremendous amount of unknown that I do applaud the courage to go forward and learn from."
General Catalyst launched HATCo in October with the express purpose of buying a health system that would get access to the venture capital firm's portfolio companies in the hopes of bolstering its digital and value-based care capabilities.
Richard Zane, MD, chief innovation officer of Aurora, Colo.-based UCHealth, called the deal a "bold move" that essentially turns an entire health system into a "digital laboratory for not only tech development but also to better understand the levers on value and risk."
"By making it for-profit and perhaps tolerating financial losses on the health system side to realize larger potential gains on the venture side is most assuredly creative. Perhaps not too dissimilar from other health systems who leverage margin across providers, hospitals and a health plan by tolerating losses in one for gains in another," he said. "Hoping that patient care remains the true north, this could be a remarkable story."
General Catalyst has said it intends for the purchase to be a one-off. The deal for Summa Health, a roughly $2 billion system, is expected to close in the next several months, pending regulatory approval.
"If there is one thing in healthcare you can predict, it is that organizational integration will continue in novel and innovative ways to drive disruption," said Jennifer Stephens, DO, chief value and ambulatory care officer for Allentown, Pa.-based Lehigh Valley Health Network. "This acquisition, in particular, will be interesting to follow given the nuances of a for-profit transition, tech-startup portfolio, and value-based care vision. My take is that those niche elements are not likely to occur as part of a larger trend, causing this deal to fall into a category of its own."
General Catalyst's stated goals of shifting American healthcare from a system of "sick care" and making it more accessible are enviable ones, said Michael Hasselberg, PhD, RN, chief digital health officer of University of Rochester (N.Y.) Medical Center. He called the firm's tech-focused, "health assurance" strategy "fascinating."
"However, the transformation of healthcare will not happen overnight, and it is not clear whether HATCo's nontraditional approach will improve care quality, increase access, and create a better health experience for patients at a lower cost," he said. "The healthcare industry will keep a close eye on the HATCo experiment, but improved patient outcomes will need to be demonstrated before this becomes a larger trend."
Some of the factors to judge the deal's success will be the reaction from commercial payers; how much it helps with physician recruitment and staffing shortages; whether General Catalyst's portfolio companies supplement — or replace — Summa Health's IT vendors; if it gives the health system a competitive edge in a busy Ohio market; and what "uncharted" regulatory and licensure questions pop along the way, Mr. Miri said.
"Whether it is excellent or not will depend on how focused HATCo is on the patient, and how central physicians, NPs, PAs, and nurses are to charting HATCo's course in this endeavor," said Shari Rajoo, MD, chief medical officer for population health at Johnson City, Tenn.-based Ballad Health. "The delivery of high-quality, efficient care to Summa's patients is paramount."
Chris Coburn, chief innovation officer of Somerville, Mass.-based Mass General Brigham, said the endeavor will bolstered by the leadership of Dr. Harrison, who he called "one of the nation's top hospital chief executives operating in a locale he knows intimately." Dr. Harrison, who left Intermountain Health for General Catalyst in 2022, worked at Cleveland Clinic earlier in his career.
"The HATCo model is a bold step to address many long-standing questions on the adoption of new technology," Mr. Coburn said. "In theory, HATCo will have the ability to definitively assess the performance and potential of a new technology and directly act on it, which contrasts to the current model that can be highly iterative — often characterized as 'death by pilot.' Ideally, these insights will radiate throughout the provider community."
Patience is of the essence, hospital leaders say, both for General Catalyst in its management of Summa Health and for industry executives who want to replicate the approach.
"I'm not sure it is a part of a larger trend yet," said Praveen Chopra, chief digital and information officer for Green Bay, Wis.-based Bellin Health and La Crosse, Wis.-based Gundersen Health System. "However, I do think it is quite an innovative way to bring the physical and digital ecosystem together for creative disruption within healthcare within a for-profit ownership construct. This model may take up to a decade to perfect. Would the investors and owners have the patience and wherewithal to see it through?"
General Catalyst has emphasized its long-term commitment to Summa Health, saying it is not "another private equity deal." Dr. Harrison told Becker's in October: "We're in this for years and decades."
However long it takes, health system executives say they're rooting for the acquisition's success — for what it could mean for healthcare as a whole. "It would be beneficial, for this bold bet to pan out, to publicly demonstrate tangible progress towards improving experience, quality and bending the cost curve," Mr. Chopra said.