A group of Ohio residents have submitted a letter asking Ohio Attorney General Dave Yost to investigate Akron-based Summa Health’s proposed sale to venture capital firm General Catalyst’s Health Assurance Transformation Corp. subsidiary.
The group, Summa Is Not For Sale, said in its April 18 letter shared with Becker’s that the proposed transaction “raises the specter of impermissible private inurement, violates the charitable trust obligations under which Summa Health’s assets were developed and maintained, and appears to conflict with obligations established under precedent.”
In November, Summa reached a $485 million definitive agreement to join HATCo. Under the agreement, the $485 million purchase price will help Summa Health — which will transition into a for-profit structure — pay off $850 million in debt. Summa Health’s remaining cash will fund a new, separately governed community foundation to support community investment in the Akron area.
Summa Is Not For Sale raised concerns in its letter that the purchase price “appears to reflect only the hospital’s debt and not the enterprise value of the organization or its substantial net assets.” They are demanding a second, independent appraisal, which they believe will find a “more reasonable sale price $950 million (based on net asset figure from EMMA filing) to $1.6 billion (figure based on Summa’s enterprise value).”
“By allowing General Catalyst to acquire a charitable nonprofit system at a distressed valuation — particularly while assuming no ongoing legal obligation to continue the same level of community benefit — the sale may amount to a misuse of charitable assets,” the group argues in the letter.
The group is asking the attorney general to:
- Investigate whether this transaction constitutes impermissible private inurement under Ohio law.
- Require an independent valuation and community impact study.
- Halt any sale or restructuring of Summa Health until those obligations are met.
In a statement shared with Becker’s, Summa Health Board of Directors Chairman George Strickler said Summa worked with its strategic and financial advisor Kaufman Hall and engaged an independent third-party, VMG Health, to provide a detailed valuation.
He said VMG confirmed that the $485 million purchase price “within its analyzed range of fair market value” and the assessment gave the board the confidence that transaction “reflects the true value of our organization and the vital role Summa Health plays in improving the health of all those we serve across the greater Akron region.”
“As important, the impact of this transaction extends far beyond financials,” Mr. Strickler said. “By eliminating approximately $850 million in debt and securing $550 million in new investment — an amount nearly twice as much as Summa could afford to invest on its own — the health system is better positioned than ever to invest in our people, expand services, and strengthen care delivery for the long term.”
He also said the board ensured that HATCo is formally committed to Summa’s mission, including maintaining its charity care policy, keeping access open to critical service and continuing the system’s long-standing commitment to medical education.
Summa said in its most recent financial report that the system and HATCo are currently working with regulators through their review process on the deal.
