Summa Health CEO says sale to HATCo could be complete by year's end

Summa Health's chief told residents gathered at an Akron neighborhood meeting Thursday that health system's pending sale to HATCo — a subsidiary of venture capital firm General Catalyst — is on course for possible completion before year's end.

During a Ward 5 meeting at the East Akron Neighborhood Development Corporation, Summa Health President and CEO Dr. Cliff Deveny told residents on Thursday that the final contract is currently under construction.

"Once we're done with that, we will submit it to the attorney general of Ohio, the state department of insurance , because we have SummaCare so they have to review everything, and then the attorney general has to review everything," said Deveny.

He explained that the attorney general's role is to ensure that Summa is paid a fair price for the sale.

"The department of insurance's job is to make sure that the insurance company is going to be owned by an organization that will maintain its viability indefinitely, and meet all of its obligations," Deveny said. "The other thing is that the charitable purpose of what Summa does today needs to continue to be met."

Deveny said that the process could take until the end of 2024. There will be an opportunity, he said, for people to provide input to both the attorney general's office and the insurance department. If the insurance department and the attorney general signs off, then the transition begins.

"And in that, we've developed a plan with about 125 different initiatives that we will be focusing on on how to improve our efficiency, improve quality and all the different things that need to be addressed, and then we will also start to get some investment of the dollars," said Deveny.

Simultaneously, he said, HATCo will begin buying buildings and equipment, and hiring all of Summa's 8,500 employees.

"The old company would wind down and it would become a community charity ," Deveny said. "You've heard of the Akron Community Foundation, you've heard of the GAR Foundation, the Knight Foundation. There is a group of people who are not employed by Summa that are working with independent counsel and with independent advisors on what is the right model for this community?"

What might the community foundation look like?

Deveny said the proposed mission of the foundation would be addressing nonmedical factors that affect health care — things like transportation and housing — the so-called "social determinants of health."

"We have 600 missed appointments every month because people don't have reliable transportation," said Deveny. "The Uber, the Lift, the SCAT bus , all those things don't show up or they show up late. Those people then get criticized by the office because they're late. Well, you know what? They're late because the people they depended on didn't bring them on time."

He said food insecurity, housing and unreliable internet coverage are also priorities for the yet-to-be created foundation to address.

Summa will first use the proceeds from the sale to pay its bills, Deveny said. The remainder will be used to create the foundation.

He said the Ohio Attorney General's office requires that an independent group craft the foundation.

Deveny said Summa, in keeping with its mission to meet the needs of the community, wants to "create an organization that can address the things that Akron General, Akron Children's, Western Reserve and Summa can't do. We can't fund housing; we can't fund internet; we can't fund transportation, but what we do see is those things have an impact on people's health in our community."

The AG's office, Deveny said, will review the plan after it is submitted.

"All we can do is propose a plan, and then they have to scrutinize it and they have to decide, 'yeah that works,' or 'no, that doesn't work,'" Deveny said.

Deveny welcomes residents' scrutiny of acquisition

Akron residents have been skeptical of the proposed sale since it was announced in January. Deveny said he doesn't blame them, noting that it took six months of conversations before the Summa Board of Directors agreed to meet with HATCo CEO Dr. Marc Harrison . The Summa chief said he, too, was skeptical at first — as were U.S. Senator Sherrod Brown, D-Ohio, and U.S. Rep. Emilia Sykes , D-Akron.

Matthew Charlebois, who had spoken out against the sale at Monday's Akron City Council meeting , reiterated his concerns at Thursday's community meeting.

"The reason I'm in opposition is because 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," Charlebois said.

Additionally, Charlebois said Akron residents and Summa employees had no say in the sale. Residents should have a say in what happens with their health care, he said, not venture capital firms that have no "vested interest in Akron" except for the profit they can extract from the community.

"Matthew, I'm glad you brought that up," said Deveny, "because he is right, in that, historically, for-profit hospitals have done exactly what Matthew said." He cited the recent collapse of Steward Health Care as an example.

He said the difference here is that Summa isn't being acquired by a typical private equity firm. Deveny said General Catalyst is only looking for a 1% to 2% return.

"It's hard to believe, Matthew," Deveny said, "I was skeptical for over a year, as well. Where they want to make their money is on introducing new technologies with the companies they invest with and prove them in Akron."

David Guran was dubious about General Catalyst only looking for a 1% to 2% return. Venture capital firms exists solely to make money, he said.

"Someone's not really telling the truth, here," Guran said.

"I think that's exactly what I said, that's what Sherrod Brown said, that's what Emilia Sykes said — it doesn't make sense," Deveny said.

However, he said, it makes sense in the context of General Catalyst needing a platform from which to test the technology it's developing with its partners.

"You can believe me or you can not believe me, you can be skeptical — I'd say I'd be skeptical — I think we all have to be proven that this is going to work," Deveny said. "But I know next year, I'm either running the health system on my own or I'm running it with a partner that has hundreds of millions of dollars they're willing to invest in our community."

Contact reporter Derek Kreider at DKreider@Gannett.com or 330-541-9413.

This article originally appeared on Akron Beacon Journal: Summa Health CEO says sale to HATCo could be complete by year's end