Summa Health is trying something radical to secure its long-term future serving Greater Akron.
Summit County’s largest employer and hospital system has agreed to become a guinea pig of sorts for a new venture capital company aimed at transforming health care through technology.
Summa and Health Assurance Transformation Corporation (HATCo) today announced signing a non-binding letter of intent outlining HATCo’s planned acquisition of Summa.
The deal, which could be wrapped up by mid-summer, would maintain or grow Summa’s staffing and also cement its headquarters in Akron, neither of which was part of any other proposed Summa mergers or sales, said Dr. Cliff Deveny, Summa’s president and CEO.
Summa, which includes Akron City Hospital, the Barberton campus, SummaCare insurance company and outpatient locations and physician offices across the region, has more than 8,000 employees.
If the sale goes through, Summa would become a for-profit hospital, shedding its non-profit status.
Proceeds from the sale would go into a substantial community endowment. Deveny wouldn’t speculate how much money might be involved, but said it would be comparable to the GAR Foundation, which awards more than $7 million annually to Greater Akron nonprofits.
Summa sale: Here’s what we know about the potential sale to venture capital firm HATCo
The Summa endowment would focus on everything that goes into good health, from housing and transportation to nutrition and addiction treatment, said George Strickler, chairman of Summa’s board of directors, who supports the deal with HATCo.
In exchange, HATCo would own a health system that it hopes will ultimately serve as a model for health care transformation across the industry, both in the U.S. and abroad.
Summa’s name and leadership team would also remain in place after the sale, along with the safety net of services Summa provides to the community, from behavioral healthcare to emergency room treatment.
Summa is among hospital groups across the country merging or selling themselves to larger companies to survive in a changing and competitive health care marketplace in recent years.
“Those models may improve things temporarily or take things apart…but we’re trying to expand our reach” through partnering with HATCo, Deveny said.
Who is HATCo?
HATCo is a new company owned by General Catalyst, one of the largest venture capital firms in the U.S. In recent years, it’s raised hundreds of millions of dollars to focus on health care.
Dr. Marc Harrison, a former Cleveland Clinic executive and pediatric emergency care physician, joined General Catalyst to launch and lead HATCo in October.
At the time, Harrison co-authored a blog post outlining HATCo’s three goals: Working on transformation at about 20 health systems HATCo partners with but does not own; Building a model of technology solutions to drive the transformation; And acquiring and operating a health system “for the long term where we can demonstrate the blueprint of this transformation for the rest of the industry.”
Summa, it turns out, was the health care system HATCo had in mind, Harrison said this week, joking that Summa and HatCo were merely “dating” at the time.
Now, he and Deveny said it’s serious.
Harrison – who also served as CEO of Cleveland Clinic Abu Dhabi before becoming president and CEO of Utah-based Intermountain Healthcare – said he met Deveny about a year ago through mutual friends and they’ve been talking about the purchase ever since.
Deveny said the most compelling part about HATCo is they believe in a health care model that takes care of everyone, including through charity care.
What a shift from non-profit to for-profit care may mean for people who depend on Summa is not entirely clear.
A 2021 study by Ohio University professors Cory Cronin and Berkeley Franz found that for-profit hospitals, like the one proposed by HATCo, were more likely than nonprofits like Summa to be in communities with greater economic and health needs.
These communities had lower rates of health insurance, more unemployment and poorer health outcomes.
For-profit hospitals are not obligated to report their community benefits like their non-profit peers, however. That, the professors said in 2021, means there is not much research to show whether they act as anchors improving the health of communities around them.
HATCo founder calls Summa a ‘spectacular asset’
Harrison said Summa is a “spectacular asset, not just clinically” but “philosophically.”
He praised Summa for finding a long-term solution to its needs before reaching a crisis, which has driven other hospital systems into mergers or sales.
Summa has been looking to sell itself or fina a new partner for several years.
Most recently, a deal to sell Summa to…
Read More: Summa Health in Akron to be acquired by HATCo, a venture capital firm