TLDR:
– Summa Health is in talks to be acquired by venture capital firm Health Assurance Transformation Corporation (HATCo).
– HATCo is owned by General Catalyst, one of the largest venture capital firms in the U.S., and is focused on healthcare investments.
– Summa is looking to sell itself to survive in a changing and competitive healthcare marketplace.
– Summa was trending towards an operating loss and has not fully implemented its long-term strategy due to lack of funds.
– The terms of the deal and the amount of investment HATCo is pledging to make have not been disclosed.
– The sale proceeds will go into a substantial community endowment that will focus on various aspects of good health.
– Summa’s headquarters will remain in Akron, and there are no plans for layoffs.
– If the sale goes through, Summa will become a for-profit hospital, shedding its non-profit status.
– The deal could be completed by mid-summer, pending regulatory reviews and approval by the Ohio Attorney General’s Office.
Summa Health is currently in talks to be acquired by a venture capital firm called Health Assurance Transformation Corporation (HATCo). HATCo is owned by General Catalyst, one of the largest venture capital firms in the U.S. General Catalyst has raised hundreds of millions of dollars in recent years to focus on healthcare investments. Dr. Marc Harrison, a former Cleveland Clinic executive, joined General Catalyst in October to launch and lead HATCo.
The sale of Summa Health is driven by the need for hospital groups to merge or sell themselves to larger companies in order to survive in a changing and competitive healthcare marketplace. Summa has a strong executive team with good ideas and management, but lacks sufficient funds to fully implement its long-term strategy that was started about five years ago. Summa was trending towards an operating loss in 2023, posting a $7 million loss for the first nine months. However, its cash on hand was still within an adequate range to pay bills for 100 to 150 days.
The terms of the deal and the amount of investment HATCo is pledging to make have not been disclosed. The proceeds from the sale will go into a substantial community endowment that will focus on various aspects of good health, including housing, transportation, nutrition, and addiction treatment. Summa’s headquarters will remain in Akron, and there are no plans for layoffs. However, Summa will become a for-profit hospital, shedding its non-profit status.
If the deal is approved, it could be completed by mid-summer. Both parties have signed a non-binding letter of intent, allowing for an examination of each other’s financial books before deciding to proceed. The deal will also undergo regulatory reviews, including a review by the Ohio Attorney General’s Office, which oversees nonprofit entities.
