A $485 million deal to sell the nonprofit Summa Health to a private equity company moved forward Thursday, with both groups signing a definitive agreement confirming the outlines of the transaction.
The deal between Summa and General Catalyst’s Health Assurance Transformation LLC, or HATCo, still must be approved by regulators, including the Ohio Attorney General, the Ohio Department of Insurance and the Federal Trade Commission. But in signing the agreement, the parties have agreed to move forward with the deal, which would turn the nonprofit Akron hospital system into a for-profit entity.
In a press conference Thursday, Akron Mayor Shammas Malik said he was happy to see the process moving forward.
HATCo “really has a pretty innovative thesis about what they want to see when it comes to change in healthcare,” Malik said. He said that the $485 million purchase represented a “significant” commitment from the company and that HATCo has been transparent with the city about the process.
“My hope is this deal will be transformative not just for Summa but beyond that,” Malik said.
In addition to the purchase price, a statement announcing the deal said HATCo had committed $350 million in capital funding in the deal’s first five years. That money would pay for technologies that support growth as well as for routine needs. HATCo also committed $200 million to drive innovation over seven years, the statement said.
A spokesperson for the company did not immediately return a phone call and an email seeking comment about the deal’s progress. In the statement, the groups said the purchase would allow Summa to pay down $850 million in debt, when paired with its existing available cash. The deal will also create a new community foundation to support regional healthcare.
The purchase is intended to create a community-based healthcare system that is more affordable, more proactive and more equitable, according to both companies. In the statement, Summa Health President and CEO Cliff Deveny said the deal would better position the hospital to build on its existing strengths.
“Our goals are to expand access to care and improve the experience for our patients, providers and staff,” he said. “This is only the beginning of our long-term journey together.”
The hospital will continue a community benefit and charity policy. Its current employees will transition over to the new company, according to the news release.
The due diligence process the groups went through “further cemented our trust and confidence” in HATCo’s commitment to Summa, said George Strickler, chair of Summa Health’s Board of Directors.
“This opportunity with HATCo puts us in a stronger position to navigate headwinds, transform the health system and create a sustainable path forward to better serve our people, our patients and our communities,” he said.
This article will be updated as more information becomes available.