Summa Health System (Ohio)

Venture capital firm General Catalyst announced it closed $8 billion in new capital, including $6 billion for its latest fund, Fund XII, and $2 billion in separately managed accounts. The $8 billion will be used to boost the firm's investments across various sectors, including defense and intelligence, climate and energy, AI, industrials, and healthcare and fintech. The company will distribute $4.5 billion to its core VC funds focusing on seed and growth equity across its Ignition, Endurance and Health Assurance strategies, $1.5 billion for its Creation strategy and $2 billion for separately managed accounts. A priority for Fund XII is the company's Health Assurance Ecosystem, which the VC firm says makes up 15% of the U.S. Healthcare operations across hospital system partnerships and consists of a network of 23 global healthcare systems working to implement meaningful digital health transformation. A representative from the firm told MobiHealthNews in an email that $750 million in capital from Fund XII is allocated to the Health Assurance Fund. "We are ready to be the company that drives transformations, global resilience and applied AI for the world. We are powered by early-stage venture capital at our core and excited to dream bigger and co-create with our GC Famiglia of founders, business leaders, and policymakers to expand what’s possible," Hemant Taneja, CEO and managing director at General Catalyst, said in a statement. THE LARGER TREND General Catalyst's portfolio includes healthcare software company Commure, founded by General Catalyst's CEO Taneja in 2017 and launched in 2020. Yesterday, Commure announced a partnership with healthcare facilities operator HCA Healthcare to implement new technology. The partners spent the past two years codeveloping an ambient AI platform, Scribe, which provides AI-enabled automatic clinic documentation. Scribe will now be deployed across HCA's 188 hospitals and 2,400 ambulatory care sites. Initially announced in 2021, the HCA partnership was the first in General Catalyst's Health Assurance Ecosystem. Last month, the VC firm announced the formation of the General Catalyst Institute, an organization that will work with governments and public policy leaders globally to facilitate the adoption of new technologies to create global resilience. In January, General Catalyst announced its formed business venture, Health Assurance Transformation Corporation (HATCo), planned to purchase Ohio-based Summa Health, a nonprofit healthcare system with over 30 locations throughout the Akron and Canton areas. The announcement came less than six months after Taneja and Dr. Marc Harrison, former CEO of Intermountain Health, publicly announced the formation of HATCo, which would see Harrison as its CEO, and the pair's intent to buy a health system that would put technology at the forefront of healthcare prevention and delivery using a value-based care model.

Healthcare mergers and acquisitions are in no short supply as providers, retailers, health tech companies and other industry players look to expand their businesses and gain a competitive edge. Healthcare mergers and acquisitions are in no short supply as providers, health tech companies, retailers and other industry players look to expand their businesses and gain a competitive edge. Here’s a roundup of new deals that were revealed, closed, rumored or called off during the month of January. Providers BJC HealthCare and Saint Luke’s Health System have wrapped a $10 billion merger. The cross-market deal creates an integrated, academic nonprofit system that spans 24 hospitals and other locations across their home state of Missouri and other nearby markets. The arrangement brought Saint Luke’s under BJC’s organizational umbrella, though the two will maintain responsibilities and branding in their original markets. General Catalyst’s recently launched Health Assurance Transformation Corp. has signed a nonbinding letter of intent to acquire Summa Health. The deal would make the system a wholly owned subsidiary of the venture capital firm and end its longtime nonprofit status. General Catalyst has promised tech-fueled investments and other moves to transition the health system toward value-based care, new revenue streams and long-term sustainability. The organizations hope to have a definitive agreement “in the next several months.” Essentia Health and Marshfield Clinic have scrapped plans to merge and form a 25-hospital system. The Midwest nonprofits had been in “meaningful discussion” for about two years but concluded that the combination was “not the right path” for their organizations. It’s the second time in just over four years Marshfield Clinic Health System was in merger discussions that failed. Froedtert Health and ThedaCare's cross-market merger went into effect Jan. 1. The Wisconsin nonprofits had received regulatory approval for the $5.5 billion combination in December. Novant Health’s deal to acquire two North Carolina hospitals from Community Health Systems has drawn the ire of the Federal Trade Commission. The regulator is filing a lawsuit to block the $320 million deal over antitrust concerns. A spokesperson for Novant said the system plans to “pursue available legal responses to the FTC’s flawed position.” Hudson Regional Hospital and CarePoint Health System, both in New Jersey, have announced plans to merge and form a unique system of both for-profit and nonprofit hospitals. The deal is a financial lifeline for CarePoint and is supported by several elected officials concerned about a potential shutdown. The University of Pennsylvania Health System (Penn Medicine) has signed a letter of intent to acquire nearby nonprofit Doylestown Health. The pair said their arrangement builds on prior clinical integration between the organizations and will give the former its seventh hospital. Penn Medicine has also scrapped a plan to acquire Tower Health’s Brandywine Hospital. Mercy acquired SoutheastHEALTH, a Missouri system with two hospitals. Those facilities and others included in the deal will be rebranded under Mercy’s banner. Deckerville Community Hospital, Hills and Dales Healthcare and Marlette Regional Hospital, all in the thumb region of Michigan, will come together in a three-way merger to form a new system called Aspire Rural Health System. University of Missouri Health Care and Capital Region Medical Center have wrapped up an integration and are now joined under the MU Health Care brand. The organizations had been partners for over 25 years. Mercy Iowa City joined University of Iowa Health Care on Jan. 31. The former had filed for bankruptcy last summer, leading the university to win the hospital at auction. KU Health and Liberty Hospital’s planned merger caught flak from Missouri Attorney General Andrew Bailey, who said the deal would require lawmaker approval. Intermountain Health is seeking a buyer for Saltzer Health, an 11-location multispecialty group that is at risk of being shut down due to financial issues. Payers Cigna unveiled a $3.7 billion deal to sell off its Medicare Advantage, Part D, supplemental benefits and CareAllies businesses to Health Care Service Corporation. The parties expect their deal to close in the opening frame of 2025. Additionally, the Blues insurer has entered into a four-year arrangement with Cigna's Evernorth subsidiary, which will continue to provide pharmacy services to the Medicare plans should the sale close. Cigna’s Evernorth has also sold off seven outpatient imaging centers in Phoenix to RadNet’s Arizona Diagnostic Radiology Group. Elevance Health announced plans to acquire Paragon Healthcare, which operates over 40 ambulatory infusion centers across eight states. The deal is expected to close before the midpoint of this year and will help the payer offer specialty services to members with chronic and complex illnesses. Blue Cross and Blue Shield of North Carolina closed its deal to acquire 55 FastMed urgent care clinics operating across 34 of the state’s (often rural) counties. The plan’s officials said they will prioritize addressing staffing challenges and their resulting scaled-back service hours. Rite Aid received the U.S. Bankruptcy Court for the District of New Jersey’s blessing to sell its Elixir Solutions Business to independent pharmacy benefit solutions company MedImpact Healthcare Systems. The sale is expected to close in the first quarter of 2024. Medline, a medical supplies and solutions company, acquired United Medco, a supplemental benefits administrator, to grow its health plans business. The latter serves over 1 million members in the Medicare Advantage, Managed Medicaid and commercial insurance markets with its supplemental benefits platform.   Tech Cardinal Health announced a $1.2 billion cash deal to acquire Specialty Networks. The healthcare product distributor and data analytics services company said its purchase would support expansion across specialty therapeutic areas, particularly with the addition of Specialty Networks’ subsidiary PPS Analytics platform. Walgreens is reportedly eying a sale of its specialty pharmacy business Shields Health Solutions. It could be valued at over $4 billion and would likely draw interest from private equity firms as well as healthcare companies. Innovaccer, which makes digital tools for providers, acquired digital marketing and customer relationship management platform Cured for an undisclosed sum. The move adds more than 20 health systems and first-time digital health clients to Innovaccer’s current portfolio of customers and opens opportunities for tech integrations. N. Harris Computer Corporation, a vertical market software provider, acquired health IT company MEDHOST for an undisclosed sum. MEDHOST will continue to operate as a standalone business, with its portfolio of application, revenue cycle, IT and security management solutions bolstering Harris’ healthcare business. 98point6 has acquired the assets of telehealth company Bright.md that remained after the sale of its technology to Evernorth.  PointClickCare has acquired fellow post-acute care technology company American HealthTech from CPSI for an undisclosed sum. American HealthTech offers EHR products and related services to the post-acute care market. CPSI said it selected PointClickCare to ensure American HealthTech’s customers remain supported.

In the past decade or two, health systems have been establishing their own venture capital arms to support health tech startups. At least 23 health systems currently have venture capital arms — mainly big institutions such as Ascension, Cleveland Clinic, Kaiser Permanente, Mayo Clinic and UPMC. When a startup secures an investment from a health system, it receives a lot more than capital. The company also gets access to industry expertise, an inside look at the intricacies of hospitals’ real-life workflows, and the ideal environment to pilot digital tools. In interviews conducted this month, startup founders told MedCity News that they find investments from health system VC arms to be much more valuable in the long-term than capital from traditional VC firms. They also said that the tech pilots they launch with these health system partners end up being more effective because they are more incentive-aligned. For health systems, investing in a health tech startup allows them to have a hand in shaping the tools they will eventually deploy across their enterprises to solve issues like burnout, payment delays and excessive hospital readmissions. Absent that, founders create tools that forces clinicians and others to alter workflows, which ultimately stymie adoption. After all, humans are creatures of habit. More than just capital When Stanford Health Care launched its venture capital arm in 2012, it built a team of people who were truly committed to helping startups understand how care delivery systems work, said Tip Kim, the health system’s chief market development officer. Because of this, he thinks health system VC arms have a lot more to offer startups than traditional VC funds. After all, if money is all they’re after, startups should have no problem “making a left turn on Sandhill Road, where there is no shortage of professional investment firms where people make venture bets for a living,” Kim remarked. At Stanford, investors don’t provide capital to digital health startups just because they think the decision will end up generating a profit — they’re also equally if not more focused on being an active part in validating and commercializing the technology the industry needs to improve people’s health and reduce overall healthcare costs, he explained. When Stanford decides to invest in a startup, it takes on the role of being the company’s shepherd. The health system welcomes startups to the world of care delivery and walks them through clinical and operation functions, various service lines and legal compliance processes, Kim said. This close involvement greatly improves the chances that a tech pilot will be successful, he noted. “Great ideas wither on the vine all the time because of things like compliance issues, data privacy issues, etc.,” Kim declared. “Those make it really hard for systems to be a meaningful and timely partner for startups.” Some companies in Stanford’s investment portfolio include digital health enablement startup Xealth and Atropos Health, which delivers clinical data to physicians at the point of care. Both companies’ products have been commercialized and are currently used by the health system. Ensuring alignment Memorial Hermann in Houston is another example of a health system with an investment arm. Over the past couple years, the health system has made investments in about a dozen startups — including data analytics firm Clarify Health, polychronic conditions care provider Monogram Health, digital health billing startup Cedar, revenue cycle management company EnableComp and nursing software vendor Laudio. When Memorial Hermann decides to invest in a digital health startup, it’s meant to create a long-term relationship with the company rather than simply provide funding, noted Feby Abraham, the health system’s chief strategy and innovations officer. In order to ensure it is choosing the right companies with which to pursue these strategic relationships, Memorial Hermann makes sure startups target key priorities for the system. They include alleviating workforce burnout, optimizing the cost of care, addressing social determinants of health, enriching patient experiences and driving precision care, Abraham said. Laudio is one Boston-based startup that is checking a box on Memorial Hermann’s priority list. The company’s technology automates administrative tasks, which are major contributors to burnout for frontline nurse managers. These tasks include things like patient rounding, schedule making, and quality and safety checks. Memorial Hermann isn’t just a health system that agreed to give Laudio’s software a shot, CEO Russ Richmond noted. Because the system is an investor in the startup’s technology, it gets to enjoy financial upside if the software does well on the market. So, when Laudio began the process of planning its pilot with Memorial Hermann, Richmond quickly realized that the health system was going to take the time to work directly with him to co-design the program and agree on strategic goals. When a health system has an investment relationship with a startup, they are often more careful with the technology pilot design, he pointed out. Memorial Hermann made sure Richmond and his team were connected to the right personnel, received timely feedback, and were given the resources they needed to collect data and evaluate the product’s performance. “Memorial Hermann put together a broad panel of executives to evaluate Laudio from across the enterprise. Out of the gate, stakeholders from across what is a very large and sophisticated organization — including acute care, ambulatory care, HR, nursing, different sites and different functions — were assembled. And then we all talked very carefully about where to begin. Together, we determined leadership and optimized criteria for success,” Richmond remarked. As Laudio grows, it’s continuing to build out a variety of point solutions. Eventually, it will have to pivot toward becoming more of a platform-based company to stay competitive in the market, Richmond noted. To execute this shift, a startup needs not just capital, but advice from clinical leaders who are familiar with the product, he pointed out. This makes having a long-term health system partner hugely valuable. “We’ve been in a situation where it’s been very easy for us to fundraise, so it’s not about finding investment dollars. It’s actually always one click deeper than that — it’s finding the right partner with the right dollars,” he said. What the future might look like Brigham Hyde — CEO of Atropos Health, one of the startups in which Stanford has invested — values his startup’s close relationship with the health system. The partnership made it much easier for Atropos to collaboratively form pilot program goals with Stanford, he said. This month, General Catalyst took the idea of incentive-aligned technology pilots a step further. The VC firm announced its plans to acquire Ohio-based health system Summa Health. General Catalyst will use the health system as a deployment space for its healthcare portfolio companies’ technology — with lofty promises to give the nation a blueprint for what a truly tech-enabled health system should look like. Hyde is unsure how this experiment will play out. However, he recognizes that the news speaks to the healthcare industry’s need for more strategic technology pilots and wonders if there are other innovative approaches. “I’d like to see more institutional VCs collaborate. If I’m in North Carolina, I want to get in the door with all the five major health systems there, but do I have to go through every single VC door? Maybe they should all just collaborate on the things we all want to do?” he asked. It might be a worthwhile idea for health system VC arms to do some consortium-building in order to bring innovative products to the market more quickly, Hyde declared.