General Catalyst reveals plan to buy a health system

The VC firm also launched a new health business called Health Assurance Transformation Corporation

General Catalyst is no stranger to the healthtech space: in addition to its investments in some of the biggest companies, including Cityblock Health, Livongo, Oscar, Transcarent, and Better Health, the company has also partnered directly with health systems to help facilitate change.

Around a year ago the VC firm revealed that it entered into a partnership with a group of 15 health system strategic partners, including HCA Healthcare, Jefferson Health, Intermountain Healthcare, and Wellspan Health, among others, who collectively serve roughly 10% of the entire United States population across 43 states. That number has since grown to over 20 systems. 

Now, General Catalyst wants to go from being a partner to actually being one of them,  announcing over the weekend its intentions to purchase a health system.

To facilitate that, the firm unveiled a new wholly owned company called Health Assurance Transformation Corporation (HATCo), which will have three focus areas: first, to work with General Catalyst's health system partners "to help them develop and execute their transformation journey to health assurance." Second, it will build an interoperability model with technology solutions, including from the firm's portfolio companies, to drive this transformation.

And, finally, as mentioned, to own and operate its own and health system as a way for it to "demonstrate the blueprint of this transformation for the rest of the industry." No details about which health system General Catalyst is looking to purchase, or how much they plan to spend, were provided. 

HATCo will be led Dr. Marc Harrison, the former CEO of Intermountain Healthcare, who joined General Catalyst last year. 

"We first met in 2017 when GC was hatching Commure, and when Intermountain’s transformation journey towards value-based care offered a much-needed blueprint for what an operating system for healthcare really needed to achieve," Hemant Taneja, CEO and Managing Director of General Catalyst, wrote in a blog post, alongside Harrison.

"For several years after that, Intermountain continued on its path toward value-based care as a leading player inside the healthcare system, while General Catalyst began our own journey to create the ‘Amazon ecosystem of healthcare’ to help systems everywhere achieve the promise of health assurance: a more affordable, accessible and proactive system of care. We realized that a move to value-based care would be an essential part of any solution."

HATco, they wrote, will allow for "an unprecedented level of collaboration" between General Catalyst's health assurance founders, its health system partners, and the broader ecosystem.

They also laid out the companies five core principals, which include aligning stakeholder interests. 

"You cannot build an enduring functional system where providers, patients, and the financial players (investors, insurance companies, government) are not aligned. HATco will be purpose-built with the goal to ensure all the stakeholders are similarly incentivized (via a value-based care model) to improve access and outcomes and to make care more preventative and proactive," they said.

The other principals include providing more patient capital, with decades-long time horizon; a reorientation around platform innovations; a commitment to ‘radical collaboration,' with plans to partner very closely with its healthcare system partners, openly sharing best practices, new technologies and a transformation playbook; and a pivot to value-based care. 

"Building what we see as a transformational company is another step in GC’s move to ‘transcend’ venture capital. We’ve said that achieving HATCo’s mission will require a long-term orientation that existing fund structures cannot support," Harrison and Taneja wrote.

"Also, as we move to become responsible stewards of a health system in one of our nation’s communities, we did not want to be locked into arbitrary timelines of how long we could operate. Luckily, we have mission-driven partners who share our long-term orientation and believe in this vision, and who want to empower us to operate a hospital system and HATco as a whole for decades to come."

(Image source: generalcatalyst.com)