General Catalyst is shopping for a health system: What Dr. Marc Harrison is looking for

Marc Harrison, MD, CEO of Health Assurance Transformation Corp., told Becker's that the General Catalyst-launched company is looking to acquire "a system that wants to change" in the "$1 billion to $3 billion" range.

On Oct. 9, General Catalyst launched HATCo with the bold goal of "ushering in a new era of better health." General Catalyst tapped former Intermountain Health CEO Marc Harrison, MD, to lead HATCo. Despite his extensive background in hospital leadership, Dr. Harrison said that he draws upon his history as a clinician to help inform his decision-making.

While HATCo plans to acquire and operate a health system, Dr. Harrison said that he doesn't want HATCo to be viewed as a competitor to hospitals. Rather, HATCo is looking to connect health systems with the tech companies in its portfolio.

To learn more about HATCo, Becker's caught up with Dr. Harrison:

Question: Given your background in healthcare leadership at Intermountain, do you think there is something a venture capital mindset could bring to leadership that is different from a typical health system C-suite?

Marc Harrison, MD: I actually think maybe my background as a clinician informs things as much as anything. The mindset I come at things from is the memories I have with patients who have been poorly served by not preventing illness. This whole idea is that so much of what we see in healthcare is due to poor prevention. I think that the VC mindset has been relatively short-term and relative point solution based on the way that deals are structured. The thing that really attracted me about General Catalyst is that they try to make investments in companies that engage in responsible innovation and that are more prevention-oriented. I just respect so much that General Catalyst has put their money where their mouth is.

From the perspective of this project (HATCo), it is neither a VC nor a private equity play. So, we will work with portfolio companies. But probably the more mature portfolio companies that have proven ability to deliver and take good care of patients or reduce administrative burden. Because we recognize that when we work with health systems that we just need to be very careful to make sure that we do the right thing by the people who are cared for and people who work there. We're in this for years and decades. We will improve quality and work on cost. We will work with our system partners and the system that we will own to make them more economically robust, not with a plan to sell but to show what transformation looks like.

Q: You described HATCo as part of a shift to "transcend" venture capital. Could you expand on that?

MH: We have respect for lots of companies that provide a single solution. If you're going to be in the business of keeping people well, you need more platform-type activity than you do in a single-point solution activity. So one of the major functions we will have is to identify companies that should be platformized together and develop the ability to implement that repetitively. That is the first piece. Secondly, let's say you are a really terrific VC; 10% of companies that you start or invest in have a big exit. We can't afford that. We're going to be in the taking-care-of-people business. We have to be sure that the solutions we are going to implement are the right solutions for that system and those patients. 

Q: Given some of the fluctuations in the market, what is your digital health strategy?

MH: I think digital health has a role. But it is not the be-all and end-all. When we talk about what the future should look like, we think it should be a 'clicks and mortar' future. There are roles for legacy systems to do operations, have people in ICU, have bone marrow transplant units and whatever things that are just super high tech and labor intensive. They need to have physical places to take care of folks. On the other end of the spectrum, there are things that can be delivered by distance very effectively, and sometimes even better than in person. Then there's a middle ground where a digitally enabled ICU may be a more efficient and safer ICU if we actually do it really well. We are maybe a little bit more interested in the full spectrum of how digital health is deployed. For example, we are looking at artificial intelligence-powered tools, telehealth, asynchronous care, tools that crawl EHRs to look for potential problems in patients, and tech stacks that help primary care doctors close care gaps. We think that world is really pretty integrated going forward.

Q: How do HATCo's health system and hospital partners work with the company?

MH: Our team at HATCo has put together an ecosystem of assurance partners. We are now at about 20 systems. They're in 43 states in the U.S. and also in Israel, the U.K. and Canada. Now, there's a major payer that has also joined. These are impactful folks, but they're also really carefully selected to represent the breadth of healthcare. Our partners include everyone from urban safety net hospitals to big academic centers and large for-profit community hospital systems. So, we introduce them to portfolio companies, not in a commercial way, but to give them a sense of what is out there. They, in turn, tell us what they need, and we inform each other. In many instances, we help them identify opportunities and they begin to implement and they provide us with both practical and sort of more thought leadership points of view of how these companies are performing.

Q: How does HATCo aim to improve its health system partners' finances?

MH: It's really important that we are never perceived as an enemy or competitor to health systems. So, the health system that we acquire, which will be a special and distinctive thing, we don't anticipate doing that repetitively. We anticipate using that system, in concert with our leadership team, as a concept of what healthcare can look like. We don't want other folks to think that we're out there to roll up hospitals and become their local competitor. What we'd like to do, between the system that we own and the 20 systems that we work with, is to be able to demonstrate to them we can be of help to you. We can help you be resilient in the face of the transformation that is coming, such as economic headwinds and labor costs. The system is brittle and it's having a really hard time. Unlike some other players in this transforming industry, we don't think health systems are going to become irrelevant. We don't seek to commoditize them. We seek to have them continue to be important players in their community. So, it's just a very different philosophical approach.

Q: What is the timeline for the health system acquisition? What type of health system are you targeting?

MH: The work is ongoing now. We want a system that wants to change. We want somebody who is excited about what we can bring to the table both in terms of financial resources and also in terms of will, expertise and access. We'd like a system that is a robust system. Their financials may not be great. We recognize that there is actually the majority of the industry right now. But we'd like a system with a track record of excellence and a desire to serve their community and serve. We'd love for them to have some capability around value-based care; they don't need to own their own, but that would be interesting if they did. Finally, the size frame that I'm thinking about this is not hard and fast, but in that $1 billion to $3 billion range. This is big enough to be very impactful in the communities they serve but not so big that they feel like they can do everything. These $1 billion to $3 billion systems are where most Americans get their healthcare, and they generally recognize that they need to partner in order to get big things done. 

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