Summa Health is trying to do something radical to secure its long-term future serving the greater Akron area.
Summit County’s largest employer and hospital system has agreed to become a guinea pig of sorts for a new venture capital firm aiming to transform health care through technology.
Summa and Health Assurance Transformation Corporation (HATCo) today announced the signing of a non-binding letter of intent outlining HATCo’s planned acquisition of Summa.
The deal, which could be completed by mid-summer, will maintain or increase Summa’s headcount and also strengthen its Akron headquarters, said Dr. Cliff Deveney, Summa’s president and CEO, neither of which were part of any other proposed mergers or sales for Summa. . CEO.
Summa, which includes Akron City Hospital, the Barberton Campus, insurance company SummaCare and outpatient locations and physician offices throughout the region, has more than 8,000 employees.
If the sale goes through, Summa will become a for-profit hospital, eliminating its nonprofit status.
Proceeds from the sale will go to a major community endowment. Devenney did not speculate on how much money might be spent, but said it would be comparable to the GAR Foundation, which gives more than $7 million annually to nonprofits in the greater Akron area.
Wholesale:Here’s what we know about the potential sale to venture capital firm HATCo
Summa’s board chairman George Strickler, who is backing the deal with HATCo, said Summa’s endowment will focus on everything related to good health, from housing and transportation to nutrition and addiction treatment.
In return, HATCo will have a health system that it hopes will eventually serve as a model for healthcare transformation across the industry, both in the United States and abroad.
The Summa name and leadership team will also remain in place after the sale, along with the safety net of services Summa provides to the community, from behavioral health care to emergency room treatment.
Summa is among hospital groups across the country that are merging or selling themselves to larger companies in order to survive in the changing and competitive health care market in recent years.
“These models may make things better temporarily or break things up…but we’re trying to expand our reach” by partnering with HATCo, Deveney said.
Who is Hatko?
HATCo is a new company owned by General Catalyst, one of the largest venture capital firms in the United States. In recent years, it has raised hundreds of millions of dollars to focus on health care.
Dr. Mark Harrison, former Cleveland Clinic CEO and pediatric emergency care physician, joined General Catalyst to launch and lead HATCo in October.
At the time, Harrison co-authored a blog post outlining HATCo’s three goals: to work on transformation in about 20 health systems that HATCo partners with but does not own; Build a model of technology solutions to drive transformation; And getting the health system up and running “for the long term where we can show the blueprint for this transformation to the rest of the industry.”
It turns out that Summa is the health care system HATCo was considering, Harrison said this week, joking that Summa and HatCo were just “dating” at the time.
Now, he and Deviney say it’s serious.
Harrison — who also served as CEO of Cleveland Clinic Abu Dhabi before becoming president and CEO of Utah-based Intermountain Healthcare — said he met Deveny about a year ago through mutual friends and had been talking about the purchase ever since.
The most compelling part about HATCo is that they believe in a health care model that takes care of everyone, including through charitable care, Deviney said.
What the shift from nonprofit to for-profit care might mean for people who depend on Summa is not entirely clear.
A 2021 study by Ohio University professors Corey Cronin and Berkeley Franz found that for-profit hospitals, like those proposed by HATCo, were more likely than nonprofits like Summa to be located in communities with greater economic and health needs.
These communities had lower health insurance rates, greater unemployment rates, and worse health outcomes.
However, for-profit hospitals are not obligated to report their community benefits like their nonprofit peers. This means there is not much research to show whether they work as anchors to improve the health of the communities around them, the professors said in 2021.
HATCo founder calls Summa an ‘incredible asset’
Harrison said the conclusion is “incredibly valuable, not just clinically” but “philosophically.”
He praised Summa for finding a long-term solution to its needs before hitting the crisis, which prompted other hospital systems to merge or sell.
Summa has been looking to sell itself or find a new partner for several years.
Most recently, a deal to sell Summa to Michigan-based Beaumont Health, another nonprofit, fell through in 2020.
The deal would have created a non-profit organization with annual revenues of $6.1 billion, 45,000 employees and more than 6,000 affiliated physicians.
During the pandemic, both Summa and Beaumont temporarily stopped moving forward and Beaumont later backed out, even though regulators had already approved the purchase.
Financial records show Summa was heading toward an operating loss in 2023, posting a loss of $7 million in the first nine months.
Meanwhile, Summa’s cash on hand was trending downward between 2022 and 2023, but was still within what industry experts consider the appropriate range for having enough money to pay at least 100 to 150 days’ worth of bills.
Deviney said Summa’s credit rating remains stable and its health insurance plan, SummaCare, has a rating of 4.5 out of 5, making it one of the best plans in Ohio.
Akron Mayor Shamas Malik said in a statement that the city looks forward to working with HATCo “on the future of health care in Akron.”
“My hope and belief is that today’s announcement will ensure that Akron families can continue to rely on SOMA for excellent care for decades to come,” he said.
Summit County Executive Eileen Shapiro said in a statement that she is “pleased that these upcoming changes will keep local jobs in place.”
“Summit County residents have received excellent health care from Soma for decades — and that will not change,” she said. “I have great confidence in the leadership team at Summa and their decision to move forward on this progressive path, bringing new technologies to the ever-changing healthcare landscape.”
Summa has a “growth mindset,” Harrison said, saying it has already done the hard work of serving more people in outpatient settings and is changing operationally to achieve greater efficiency.
Furthermore, Harrison said Summa has a strong executive team that brings good ideas and good management. This includes a long-term strategy that Summa started working on about five years ago, but has not yet fully implemented because it does not have enough money.
HATCo will make the investment, Harrison said. It is not clear how much money HATCo will pump into Summa.
“Having an organization that looks to the future is an extraordinary treasure,” Harrison said.
However, it is not a short-term solution.
What changes will the sale mean for Summa?
There will be some change within the first year of purchase, Devenney said. But HATCo doesn’t expect a complete turnaround at Summa for at least five years.
“HATCo aims to create a new standard for healthcare investing and set expectations for investors to think long-term,” Harrison wrote in a blog post introducing the company.
“We believe it’s less about cutting costs and more about introducing technology and innovation,” he wrote, adding that part of HATCo’s plan includes health systems like Summa taking advantage of new revenue streams.
One way Summa can make more money is to serve more people.
Summa now turns away about 18% of people who call to book appointments or services because it doesn’t have the staff or equipment to serve them, said Ben Sutton, Summa’s chief operating officer.
It’s a common problem in hospital systems, Devenney and Harrison said.
“There aren’t enough doctors, there aren’t enough MRI machines in the city,” Devenney said. At Soma Hospital, some patients either have to wait a long time for an appointment or go elsewhere, he said, noting that some patients had to go to Youngstown for an imaging examination.
Cutting-edge, new technology investments can also help with patient care, Deviney said.
A few years ago, Summa launched the so-called Complex Care Institute for patients with three medical conditions who also use a medical device, such as a ventilator.
A multidisciplinary team of specialists meets with each patient in person or online to continually update the patient’s care plan. In the first year, patients in the program spent 150 to 200 days per year in the hospital.
After a year of all their doctors working together, these patients spent only five to seven days in the hospital in one year.
Imagine how patient care could improve if Summa could expand this concept to include patients with chronic diseases, such as congestive heart failure, Deviney said.
Meanwhile, doctors often spend an hour or two each workday on paperwork. Technology can eliminate that.
Nurses are getting “300% more data points every day than they were 10 years ago,” Deveney said. “They have to figure out how do we put that together and come up with a plan.” Technology can ease that burden, by sorting through that data and detecting About what is most important.
Online appointments during the coronavirus, along with a demographic shift toward people who are increasingly comfortable with technology, are also changing medicine, Devenney and Harrison said.
People will always sprain an ankle or need to go to the emergency room, but there’s no reason to have many patients drive to a large hospital campus and pay for parking.
“People are becoming more tech savvy and comfortable” online, Harrison said, saying hospital systems need “clicks and mortar.”
Additionally, Deviney said there is an entire industry of telehealth devices that can send information to health care providers. For example, someone with heart failure could get a voucher from their insurance plan and get a Bluetooth-enabled blood pressure monitor that would provide records to the person’s doctors.
“It’s not the same old”
Summa leaders will continue to lead the company because they understand what the greater Akron area needs, Harrison said.
HATCo and Summa are a strong match, Harrison said.
“This is a great health system that has a vision for the future,” Harrison said, and HATCo is looking for a like-minded future partner.
Akron is a community that seems to be on the verge of renaissance, he said.
If the Summa deal with HATCo goes through, Harrison said, “it won’t be the same old contract” in health care.