Our Take: General Catalyst’s HATCo selects Summa Health as its intended ‘blueprint’ for transforming health care
Health Assurance Transformation Corp. (HATCo), the company General Catalyst formed in October to “help health care systems everywhere deliver a fundamentally better experience for consumers,” announced on Wednesday that it had signed a nonbinding letter of intent to acquire Akron, Ohio-based Summa Health, a nonprofit integrated health care delivery system with more than 8,000 employees.
In a statement on its website, Summa Health said the signing “marks the beginning of a long-term, transformational journey together to create a new, more proactive, affordable, and equitably system of community-based, lifelong health care.”
Summa Health’s network includes two acute care hospitals, more than a dozen community-based health centers, a multi-specialty group practice, a rehabilitation hospital, urgent care centers, numerous locations that provide a broad range of medical, specialized, support, testing, and surgical services, and a health plan.
HATCo and Summa Health said in a press release the next step is to conduct due diligence, and they anticipate finalizing a definitive agreement in the next several months. The plan is for Summa Health to become a wholly owned, for-profit subsidiary of HATCo.
The organizations said they would maintain Summa Health’s commitment to charity care, noting that if the acquisition is completed, a community foundation will be created to advance the health system’s mission “through increased, focused investment into social determinants of health that benefits the entire Greater Akron area.”
Dr. Cliff Deveny, Summa Health’s president and CEO, will continue to lead the health system once it becomes part of HATCo.
“This new structure will better serve our communities clinically, economically and socially. With HATCo, Summa Health will be able to increase local investment and introduce new resources that allow us to expand access to affordable, quality, coordinated care,” Dr. Deveny said. “We’re excited about new opportunities to enhance the patient and provider experience, strengthen our recruitment pipeline, build upon our commitment to medical education and training, and expand the growth of SummaCare to advance health equity and population health across the communities we serve.”
The two organizations said HATCo’s investment in Summa Health will extend beyond near-term benefit to the health system and the patients it serves, driving a “sustainable, long-term transformation through a true shift to value-based care.”
Dr. Marc Harrison, who served as CEO and president of Intermountain Health before co-founding and assuming the role of CEO at HATCo, said, “The current national health care system is fragmented and creates barriers to care and wellness. In partnership with Summa Health, we intend to prove that a model that’s better for patients can also be good for business and create a blueprint for other systems and communities.”
Hemant Taneja, General Catalyst’s CEO and founder and chairman of HATCo, said, “Our shared vision is to create a replicable health care model that marks a true and meaningful shift from a ‘sick care’ system to a resilient, proactive model of health assurance. By doing so, we will help people stay well, bend the cost curve through innovation and make quality care more affordable and accessible. … We aim to improve the health and well-being of the Greater Akron community, create a standard for the health system of the future, and inspire communities across America to adopt this vision.”
The acquisition will be subject to regulatory approvals. Financial terms were not disclosed.
Our Take: When Hemant Taneja and Dr. Marc Harrison wrote General Catalyst’s announcement of HATCo’s launch in October, they said one of the company’s three main objectives was to acquire and operate a health system for the long term where they could demonstrate a blueprint of transformation for the rest of the industry.
They were referring to a transformation to health assurance, which they defined as a more affordable, accessible, and proactive system of care.
They said HATCo’s charter was not to disrupt health care systems, but rather to help health care organizations “change how they deliver a fundamentally better experience for consumers — and to prove the transformative effect of a true partnership between technologists, caregivers, and capital.”
If you’re interested in the details of HATCo’s vision for transforming how care is delivered in this country, the announcement is worth reading.
We now know which health system the company has chosen to be its proving ground. There’s no reason to think HATCo and Summa Health will experience any hiccups during the due diligence phase. After that, though, obtaining regulatory approval could prove challenging — particularly with the plan to switch Summa Health to a for-profit entity.
Quite a bit of press has emerged recently about the negative consequences of private equity firms buying hospitals and health systems — namely, that the quality of care decreases as the new owners cut costs to improve profits. We won’t go into a lengthy discussion of that here, but this Harvard Business Review research article on the topic is informative and thought-provoking.
As others have pointed out, the proposed HATCo deal is different. For one thing, General Catalyst is not a private equity firm but a venture capital firm — and one of the largest in the U.S., at that.
HATCo’s announcement of the proposed Summa Health acquisition, which Dr. Harrison and Mr. Taneja also wrote, delineates half a dozen other ways in which the deal between the two organizations is different. It’s also worth reading, but if you’re short on time, this sums it up pretty well:
What else you need to know
Several top insurers saw their share prices take a hit Thursday morning after Humana disclosed in a filing with the Securities and Exchange Commission that the company’s medical costs for the fourth quarter of 2023 were higher than anticipated, resulting in an estimated quarterly medical loss ratio (MLR) of 91.4%. The late-year surge in utilization led Humana to lower its projected adjusted earnings-per-share guidance for 2023 and, based on open enrollment results, Humana also lowered its expected growth in Medicare Advantage membership for 2024 from a previous forecast of “at or slightly above industry average growth” (6%-8%) to 1.8%. In addition, Becker’s Hospital Review reported two days before the SEC filing that a Humana spokesperson had confirmed the announcement of “some limited workforce reductions” at the company.
UnitedHealth also disclosed during an earnings call earlier this month that increased utilization late in 2023 had driven up its MLR as well, though not as high as Humana’s. Insurers have expressed concerned about higher medical costs since last spring, and the recent disclosures from Humana and UnitedHealth appear to have rattled investors. Humana’s share price took the biggest dive on Thursday, but Centene, Cigna, CVS Health, Elevance Health, and UnitedHealth’s share prices also dropped.
Finely tuned generative artificial intelligence models can identify clinically relevant social determinants of health (SDOH) in electronic health records, according to study results published in the journal npj Digital Medicine. The researchers built, trained, and tested language models to see how well the models could find references to social determinants such as employment status, housing and transportation issues, and social support within more than 2,000 actual and synthetic (ChatGPT-generated) clinician notes. The best-performing models correctly identified 93.8% of patients with at least one adverse SDOH mention, whereas ICD-10 codes included the adverse SDOH data in just 2% of cases. Eventually, the study authors noted, such models could shed more light on the drivers of health disparities and directly support patient care by identifying patients who could benefit most from proactive resource and social work referral.
Thirteen health systems are partnering with Bloomberg Philanthropies in a $250 million initiative to establish 10 high schools with a curriculum focused on health care. Some schools will be newly constructed; others will be revamped existing schools. At full capacity, the schools will serve nearly 6,000 students, according to a press release. Along with “robust” academic programming, the schools will offer specialized health care classes, work-based learning at the nearby partner health system, and the opportunity to earn industry-related credentials and certifications. After graduation, students can accept employment with the partner health system or continue their education. Ascension, Atrium Health, Ballad Health, Baylor Scott & White Health, Children’s Hospital of Philadelphia, Duke Health, HCA Healthcare TriStar, Mass General Brigham, Memorial Hermann Health System, Northwell Health, and Vanderbilt Health are among the initiative’s participating health systems.
Blue Cross and Blue Shield of North Carolina now owns all 55 FastMed locations in North Carolina. The two companies will operate independently, Blue Cross NC stated in a press release, and Jim Moffett will serve as FastMed’s CEO. A minority investor in the Raleigh, N.C.-based urgent care chain since 2012, Blue Cross NC announced its intent to acquire the North Carolina FastMed clinics in October. Blue Cross NC said the clinics will continue to serve all patients, regardless of their health insurance or carrier. FastMed provides preventive, telehealth, occupational health, primary, and urgent care. Additional FastMed clinics are located in Arizona, California, Florida, and Texas.
City of Hope has created a new oncology-specific large language model, one of the first of its kind. Nasim Eftekhari, executive director of applied AI and data science at Duarte, Calif.-based City of Hope, told Becker’s Hospital Review she believes the AI model and others like it have the potential to do much more than alleviate care providers’ burden through document summarization, data structuring, and responses to basic requests for information. She said the models could also be used in clinical trial matching programs and eventually in the drug discovery process, where they could identify potential drug candidates and assist in clinical trial design.
Brian Evanko will take on the roles of CEO and president at Cigna Healthcare, overseeing all of the company’s benefits business, including U.S. commercial, U.S government, and international health. Evanko joined Cigna in 1998 and will continue to serve as chief financial officer for The Cigna Group, according to the announcement.
What we’re reading
The Medicare Drug Price Negotiation Program: Statutory And Agency Authority Challenges. Health Affairs, 1.19.24
Understanding Liability Risk from Using Health Care Artificial Intelligence Tools. NEJM, 1.18.24 (registration or subscription required)
To Solve a Tough Problem, Reframe It. Harvard Business Review, Jan-Feb 24