Nonprofit Summa Health to be acquired by private venture capital firm
Summa Health on Wednesday announced it will be acquired by Health Assurance Transformation Corporation (HATCo), which would make the hospital system for-profit.
According to a statement posted to Summa's website, HATCo approached Summa about the acquisition and the two parties signed a letter of intent for the deal after board approval. HATCo was founded by General Catalyst, a private venture capital firm based in Cambridge, Mass., in 2023.
The two sides say they will enter a due diligence period to firm up details of the acquisition and plans for the future, with hopes for a completed transaction "later this year."
Recent research by Harvard Business School found that when private equity firms acquire nonprofit hospitals, benefits including the infusion of new capital can be counterbalanced by negatives such as increased costs for patients, reduced hospital staff and cutting services that would primarily benefit low-income populations or communities of color.
Summa emphasized that it intends to maintain "the same essential services it currently offers, with a focus on continued growth and enhanced access to care. All patients will continue to have access to quality, compassionate care through the physicians, providers and care facilities they’ve come to trust."
The statement continued: "As a result of the transaction, a community foundation will be created that advances Summa’s mission through increased, focused investment into social determinants of health that benefits the entire Greater Akron area."
Akron resident Ben McMillan, who used to work for Summa Health and advocated to keep the independent St. Thomas Hospital open, said he’s concerned the system’s new direction will leave behind the low-income residents it has historically served.
“I really struggle to wrap my head around how this could have been best for the community," McMillan said. "We've seen this current CEO make quite a few moves here and there during his tenure. They have not benefited the community at all.”
McMillan added he’s already watched the health system consolidate services, including the elimination of maternity wards and emergency rooms.
Summa Health operates three hospitals and 14 medical centers as the largest healthcare provider in the Akron-Canton area.
Dr. Cliff Deveny will remain at the helm alongside the new Summa Health Board of Directors, according to the statement. HATCo is led by CEO Dr. Marc Harrison, a former Cleveland Clinic executive and pediatric critical care physician.
Loren Anthes, visiting fellow on value-based care for think tank The Center for Community Solutions, said the merger will bring more tax revenue to the region. He thinks a tech startup could improve efficiencies without hurting patient care.
“The question of, hey, does this partnership with all the resources they have, does that actually create any advantages? I would say that this is new, it's different, but it's consistent with the trend in the industry in health care. And the reality is we're spending too much for not getting great outcomes," Anthes said.
This is Summa Health’s second-attempted merger in recent years. Plans to join the Michigan-based Beaumont Health didn’t go forward with in 2020.
Late last year, General Catalyst was reportedly looking to acquire a hospital system in the $1-to-3-billion range because hospitals of that size are where "the majority of Americans get their health care." Summa Health has reported that it generates $2.7 billion in "business volume impact."
According to the General Catalyst website, HATCo transforms health care systems to deliver better consumer experiences.
"HATCo’s approach is committed to sustained investment in Summa Health — not cost cuts — that will transform the patient and provider experience and enhance local delivery of care. Together, we are creating a truly unique model for the healthcare industry, focused on sustained investment in technology, innovation and services," Summa's statement said.