Key Takeaways
- • General Catalyst plans to buy an unnamed health system to serve as a proving ground for new technology aimed at improving hospital operations and patient care, according to Dive Brief reporting from HLTH23 in Las Vegas.
- • The acquisition would be made through a newly spun-out business, the Health Assurance Transformation Corporation (HATCo), led by former Intermountain Healthcare CEO Marc Harrison.
- • Neither the target system, the timing of a deal, nor the purchase price has been disclosed.
- • The venture firm's stated aim is multi-decade sustainable profits rather than the typical roughly 10-year VC exit horizon, per managing director Hemant Taneja.
- • HATCo plans to pursue value-based payment models, including fully capitated risk, to incentivize keeping patients out of emergency rooms and intensive care units.
Summary
Venture capital firm General Catalyst plans to acquire an unnamed health system that would act as a proving ground for new technology intended to improve hospital operations and patient care, according to a Healthcare Dive report published October 9, 2023. The move was disclosed Sunday at the HLTH conference in Las Vegas by General Catalyst managing director Hemant Taneja and Marc Harrison, the former Intermountain CEO who is now CEO of the Health Assurance Transformation Corporation, or HATCo. The impending purchase is part of HATCo, a new health business being spun out by General Catalyst.
Harrison and Taneja did not share details on which health system the firm is pursuing, when an acquisition could occur, or how much General Catalyst plans to spend. The firm already operates a network of 20 health systems across 43 states and four countries that trial and provide feedback on technology developed by its portfolio companies. Direct ownership, however, would give the firm greater control over a health system's operations. Harrison described the step as necessary to test new products without the risk aversion or cash shortfalls typical of providers today, stating that the company needs "a proof of concept" of a transformed model of American healthcare and "the only way we can do it is to have our own system."
Taneja said the goal is to generate sustainable profits for the health system over decades, rather than the typical 10-year turnaround of a VC deal. HATCo intends to streamline operational inefficiencies and implement value-based payment models, including fully capitated risk, which Harrison said would push providers to allocate resources creatively to keep patients out of emergency rooms and intensive care units. Taneja also pointed to generative artificial intelligence as a technology that could help hospital operators address workforce shortages by automating certain jobs. General Catalyst launched Hippocratic AI earlier this year to co-develop large language models for healthcare data with health systems.
Other healthcare-focused venture firms maintain close provider relationships as well. Andreessen Horowitz secured a deal with Bassett Healthcare Network in New York to serve as a pilot site, and 7wireVentures has built a coalition of hospital and insurer partners.
Harrison and Taneja did not share details on which health system the firm is pursuing, when an acquisition could occur, or how much General Catalyst plans to spend. The firm already operates a network of 20 health systems across 43 states and four countries that trial and provide feedback on technology developed by its portfolio companies. Direct ownership, however, would give the firm greater control over a health system's operations. Harrison described the step as necessary to test new products without the risk aversion or cash shortfalls typical of providers today, stating that the company needs "a proof of concept" of a transformed model of American healthcare and "the only way we can do it is to have our own system."
Taneja said the goal is to generate sustainable profits for the health system over decades, rather than the typical 10-year turnaround of a VC deal. HATCo intends to streamline operational inefficiencies and implement value-based payment models, including fully capitated risk, which Harrison said would push providers to allocate resources creatively to keep patients out of emergency rooms and intensive care units. Taneja also pointed to generative artificial intelligence as a technology that could help hospital operators address workforce shortages by automating certain jobs. General Catalyst launched Hippocratic AI earlier this year to co-develop large language models for healthcare data with health systems.
Other healthcare-focused venture firms maintain close provider relationships as well. Andreessen Horowitz secured a deal with Bassett Healthcare Network in New York to serve as a pilot site, and 7wireVentures has built a coalition of hospital and insurer partners.
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