The proposed acquisition of Summa Health by a venture capital firm is on track to be completed by the end of 2024, according to Summa Health's President and CEO Dr. Cliff Deveny.
The hospital system announced the acquisition plan in January by Health Assurance Transformation Corporation. The plan would make the nonprofit Summa Health a for profit hospital system. Research from Harvard Business School found when private equity firms acquire nonprofit hospitals there can be negative outcomes, such as rising costs for patients, reducing staff and cutting services that would primarily benefit low income populations and people of color. Community members have raised concerns that the same could happen at Summa.
"We have a mountain of evidence that when a hospital gets privatized to make a profit, firms need to cut staff, they offer less services, they try to service a wealthier clientele and we know that costs generally rise," Akron resident Matthew Charlebois said at a Ward 5 meeting in Akron on Thursday.
Deveny shared similar concerns, he said, but he believes this is the best way forward for the hospital system that's plagued with rising costs.
"After six months of conversations, we made the decision this is probably the best model for us long-term," Deveny explained, "because the alternatives, we like to refer to it as plan b, is if we don't do something, what are we going to have to stop doing."
After Summa's failed merger attempt with Michigan based Beaumont Health in 2020, Summa's board is not interested in attempting to merge with another hospital system, he said.
"When we see health systems merge with other health systems and they get bigger, the care doesn't necessarily get bigger, better, the experience doesn't necessarily get better," Deveny said, "but one thing that for sure happens is the prices go up."
HATCo currently has investments in several healthcare businesses but does not own any, he said.
"We would be the first outright business that General Catalyst would actually own," Deveny said. General Catalyst is the parent company of HATCo. "The good thing is they're going to be dependent on the 8,500 people in Akron, Ohio, to run it."
This is what sets HATCo's acquisition of Summa Health apart from past venture capital acquisitions of nonprofit hospitals, he added.
"You're not going to make any money on Summa Health System," Deveny explained, "but the way you would make money is developing these technologies, these things that can be applied to other hospitals, health systems in the United States."
Summa Health is working to firm up the definitive agreement with HATCo, which will need to be approved by the Ohio Attorney General and the Ohio Department of Insurance, Deveny said. If they approve the plan, the acquisition will go through.
"They would be buying the buildings, buying the equipment, buying all the things, hiring all 8,500 people," he said. "The old company would wind down, and it would become a community charity."
The charity aspect of the acquisition has not been fleshed out yet, Deveny said. A group of community members not affiliated with the hospital system are working on the plan now, but the new nonprofit will focus on social determinants of health, like transportation, housing and internet.
