How Summa Health's integration made it an appealing bet for General Catalyst
General Catalyst hopes its deal to buy Ohio health system Summa Health is just what the doctor ordered.
Why it matters: The transaction gives General Catalyst an inside view of hospital operations, and Summa's integrated structure gives the firm a chance to incentivize preventive, lower-cost care even as it makes money.
Between the lines: Summa's integrated care delivery system spans a health plan, chronic condition management for issues including cardiovascular and behavioral health, and home care — all focus areas for several of the startups in General Catalyst's burgeoning health portfolio.
- As part of the transaction, GC will convert Summa from a nonprofit to a for-profit.
Zoom in: SummaCare, the company's health plan, accounted for roughly a third of the organization's revenue in 2023, per Summa CEO Cliff Deveny.
What they're saying: "The existence of an integrated health plan should be incredibly attractive," says General Catalyst subsidiary HATCo CEO Marc Harrison.
- "The fact that that intellectually and sort of strategically is part of the organization already, I think we're primed to actually help keep people well as opposed to just taking care of them when they're sick," Harrison adds.
- "In the business model," says Summa COO Ben Sutton. "The health plan does better when people are well as opposed to when people are sick."
Meanwhile, Summa's "fastest-growing network" is its post-acute and home care division, per Deveny.
Be smart: To avoid taking on too much risk too quickly, a firm like General Catalyst may start small, focusing on tech tools to streamline areas like clinical documentation.
- "We want to take it slow but at the same time, think about some quick wins," says GC CEO Hemant Taneja. "And our view is, the quick wins are all about removing friction, wherever we can, for the clinicians and administrators."
What we're watching: GC could start by streamlining electronic health records (EHRs), whether by layering tools on top of Summa's existing Epic systems or taking on the bigger challenge of creating something entirely new.
- "I think the era of EHRs as the center of the universe is coming to an end," says Mayo Clinic Platform president John Halamka.
- Excessive documentation is widely known to contribute to provider burnout, for example. Indeed, Deveny says staff attrition or burnout is Summa's "biggest issue," with rates holding steady at 20.5%.
- "It was super clear that the documentation burden on clinicians is bringing them to their knees. And if there's a digital solution that can fix that, we're buying it," says UCSF Department of Medicine chair Bob Wachter.
Reality check: While GC has plenty of whitespace to innovate while boosting its portfolio, Summa's current nonprofit status and the subsequent conversion process will prompt questions of governance and culture.
- "How much can you really maintain a local presence — and authority at the local level — but still achieve the for-profit turnaround level?" says Ropes & Gray partner Torrey McClary.
- "That's a more obvious play when you're dealing with two nonprofits coming together," she says.
Profits from Summa's sale are set to be funneled into a community foundation, which will be used to support general health in Akron. But the future operation, governance, and capital structure will likely have to change as the system converts to a for-profit entity, she notes.
Flashback: Summa explored deals with multiple partners, including other nonprofits, before deciding to sell to GC.
- "We were looking for creative partners looking for something that would make sense and we were not having success — with traditional nonprofits, we talked to just about everybody, we've talked to all kinds of different types of capital partners," says Deveny.