Ohio Attorney General Approves General Catalyst's Acquisition of Summa Health with Conditions

Ohio Attorney General Dave Yost has conditionally approved the acquisition of Summa Health by Health Assurance Transformation Company (HATCo), a subsidiary of venture capital firm General Catalyst. The deal, which marks a significant milestone in the healthcare industry, comes with a set of 10 conditions aimed at protecting patient care and ensuring continued investment in the Akron community.

Deal Structure and Financial Details

The original purchase price of $485 million has been increased by $30 million as part of the conditions set by the Attorney General's office. HATCo will provide an additional $15 million in cash and $15 million in equity to the surviving nonprofit foundation. This brings the total value of the transaction to $515 million.

The purchase price, combined with Summa Health's current cash reserves, will enable the health system to eliminate $850 million in existing debt. The deal will transition Summa Health from a nonprofit to a for-profit operation, with the proceeds from the sale going towards debt repayment and the establishment of a charitable foundation.

Key Conditions and Commitments

Attorney General Yost's approval comes with several important conditions:

1. The charitable foundation receiving the sale proceeds must have a purpose consistent with Summa's original charitable mission.
2. The majority of the foundation's board members must have no affiliation with Summa Health.
3. For three years post-closing, the foundation cannot sell its $15 million equity interest.
4. HATCo must maintain Summa's charity care policies, essential services, and medical education programs.
5. Three members of the new for-profit system board will be local community members, with one member sitting on the HATCo parent board.
6. HATCo will file yearly reports with the Attorney General's office to demonstrate compliance with post-closing obligations.
7. The Ohio Attorney General will retain jurisdiction for 10 years to enforce HATCo's ongoing obligations.

Community Response and Concerns

The acquisition has faced some pushback from local advocacy groups, particularly a coalition called "Summa Is Not for Sale." While the group acknowledges that the Attorney General has made "innovative changes" to the purchase agreement, they maintain that Summa Health is being sold for approximately half its market value.

Jeff Barge, a coalition member, stated, "We're pleased that the Akron community will continue to hold an equity position in Summa Health for at least the next three years, even if it is just 3 percent." However, the coalition believes that the true market value of Summa Health exceeds $800 million.

Despite these concerns, Attorney General Yost expressed confidence in the deal, stating, "With proper safeguards in place, this has the potential to strengthen healthcare in northeastern Ohio for years to come."