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BFD Expert Voices - Health Tech Deals

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Summa Health inched one step closer to transforming into a for-profit by inking a $485 million deal with General Catalyst on Thursday.

Why it matters: It's a significant step forward for an unconventional and unprecedented deal that was first announced in January.

Zoom in: The purchase price, when added to Summa Health's current cash, will let Summa eliminate $850 million in existing debt.

Remaining cash, after closing adjustments, will finance a new and separately governed community foundation to support health in the greater Akron area.

What's next: Summa Health and General Catalyst-owned Health Assurance Transformation (HATCo) will file for regulatory approval with the FTC, the Ohio Attorney General and the Ohio Department of Insurance.

Between the lines: If the organizations file for approval under the current merger regime, "that could be perceived as helpful, because people do perceive the new requirements to be more onerous," says Ropes & Gray partner Torrey McClary.

The new antitrust merger requirements — the product of a bipartisan effort and set to take effect in January 2025 — require parties to provide more information on supply and customer relationships, as well as transparency on ownership structures, among other disclosures.

Yes, but: HATCo plans to convert Summa from a nonprofit to a for-profit operator, which "could have a potentially lengthy review period," she adds.

"In my personal experience — including recently in some states — attorney generals can sometimes extend the review period" in cases like these.

When a nonprofit transitions to for-profit, "there's potentially more concern about how the hospital will continue to be operated after closing in a way that's consistent with community needs," she says.

Case in point: Late last year, North Carolina Attorney General Josh Stein sued HCA Healthcare for failing to comply with the asset purchase agreement it executed when it acquired Mission Health System in 2019 for about $1.5 billion.

Since HCA acquired Mission, the North Carolina Department of Justice received more than 500 complaints, with patients raising concerns about emergency and trauma services and oncology services.

What they're saying: McClary tells Axios there are numerous conditions HATCo and Summa could be required to meet, "like receipt of important third-party consents, or consents to assignment, or actions with respect to debt or licensure changes — and other state and local regulatory approvals that are specific to the hospital operations."

"We anticipate the regulatory review to take time given the unique nature of this transaction, and we look forward to cooperating with the agencies throughout their review processes," General Catalyst partner Molly Gillis tells Axios.

General Catalyst's hospital venture inches forward

An agreement has been signed on the deal that was announced in January.

Illustration of a venn diagram with a hospital bench and clasped hands on one side and money and a health insurance card on the other

Health tech deals

Summa Health inched one step closer to transforming into a for-profit by inking a $485 million deal with General Catalyst <a class="gtmContentClick" data-vars-link-text="on Thursday" data-vars-click-url="https://www.businesswire.com/news/home/20241107295901/en/Summa-Health-and-General-Catalyst%E2%80%99s-HATCo-Sign-Definitive-Agreement-to-Advance-Vision-for-Future-of-Healthcare-Delivery" data-vars-content-id="99ec43d1-e602-4f3c-adc7-2181eeb0c477" data-vars-headline="General Catalyst&#x27;s hospital venture inches forward" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.businesswire.com/news/home/20241107295901/en/Summa-Health-and-General-Catalyst%E2%80%99s-HATCo-Sign-Definitive-Agreement-to-Advance-Vision-for-Future-of-Healthcare-Delivery" target="_blank">on Thursday</a>.Why it matters: It&#x27;s a significant step forward for an unconventional and unprecedented deal that was first <a class="gtmContentClick" data-vars-link-text="announced in January" data-vars-click-url="https://www.axios.com/2024/01/17/summa-health-ohio-general-catalyst" data-vars-content-id="99ec43d1-e602-4f3c-adc7-2181eeb0c477" data-vars-headline="General Catalyst&#x27;s hospital venture inches forward" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2024/01/17/summa-health-ohio-general-catalyst" target="_self">announced in January</a>.

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General Catalyst's hospital venture inches forward

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