General Catalyst led a $95.5 million funding round for a Texas-based physician clinic chain in early January, and a week later the investment firm announced plans to acquire Akron, Ohio-based Summa Health.
General Catalyst has expanded in the healthcare space over the last few years, and launched a division last year focused on healthcare providers called Health Assurance Transformation Corp., which is led by former Intermountain Health CEO Marc Harrison, MD.
The company's investment in the physician group, Harbor Health, will help it continue to grow. Last year, Harbor Health grew from two to eight locations. General Catalyst was interested in Harbor Health for many reasons, including its risk contracts with Blue Cross Blue Shield of Texas and its ACO REACH product with CMS.
"There's a strong appetite for a fresh approach to healthcare delivery among employers that prioritizes outcomes, enhances consumer engagement and is proactive by design," said Chris Bischoff, managing director of General Catalyst. "We believe Harbor Health is providing ease of access to the largest covered population in the U.S. and bringing much-needed change as the company seeks to transform value-based care for the commercial sector. This aligns with our Health Assurance thesis."
HATCo then announced plans to acquire Summa Health, which includes acute care as well as outpatient and home care services. Pending regulatory approval, Summa will become a wholly owned subsidiary of HATCo and establish a community foundation to advance the health system's mission. The foundation will also invest in social determinants of health programs.
If the investment goes through, General Catalyst will retire $800 million of Summa Health's debt. The company doesn't anticipate layoffs at Summa Health, and currently expects the leadership to stay intact. With the acquisition, Summa would transition from a nonprofit to a for-profit health system.
"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," Richard Zane, MD, chief innovation officer of Aurora, Colo.-based UCHealth, told Becker's. "Hoping that patient care remains the true north, this could be a remarkable story."