Here's what we know about the Summa sale to venture capital firm HATCo
Summa Health has entered into talks to be acquired by a new health care venture capital firm called Health Assurance Transformation Corporation or HATCo for short.
Here's what we know about the deal:
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.
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Why is Summa for sale?
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.
Harrison said Summa has a strong executive team that provides good ideas and good management. That includes a long-term strategy Summa started working on about five years ago, but has yet to fully implement because it hasn’t had enough money.
Summa sale: HATCo, a new health care venture capital firm, to acquire health giant in Akron
Is Summa losing money?
Summa was trending toward an operating loss in 2023, posting a $7 million loss for the first nine months, financial records show.
Summa's cash on hand, meanwhile, was trending down between 2022 to 2023, but was still within what industry experts consider the adequate range of having enough money to pay at least 100 to 150 days worth of bills.
What's the sale price?
The terms of the deal have not been disclosed, but proceeds from the sale would go into a substantial community endowment. Summa President and CEO Dr. Cliff 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.
The parties have not yet shared how much investment HATCo is pledging to make into the health system.
What will be funded by the new Summa community endowment?
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.
Will Summa's headquarters stay in Akron after the sale? Will there be layoffs?
The deal 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.
Will Summa Health remain nonprofit after the sale?
No. If the sale goes through, Summa would become a for-profit hospital, shedding its non-profit status.
When will the sale be complete?
The deal could be wrapped up by mid-summer, according to Summa officials.
Summa and and HATCo have signing a non-binding letter of intent outlining HATCo’s planned acquisition of Summa. The letter allows both parties to examine each other's financial books before deciding to go forward.
The deal also has to go through regulatory reviews, including at review by the Ohio Attorney General's Office, which oversees nonprofit entities.
This article originally appeared on Akron Beacon Journal: What we know about Summa sale to venture capital firm HATCo
