Dive Brief:
- Venture capital firm General Catalyst plans to buy an unnamed health system to act as a proving ground for new technology to improve hospital operations and patient care.
- The impending purchase is part of a new health business being spun out by General Catalyst, called the Health Assurance Transformation Corporation, or HATCo, General Catalyst managing director Hemant Taneja and former Intermountain CEO (and new HATCo CEO) Marc Harrison said Sunday at the HLTH conference in Las Vegas.
- Harrison and Taneja did not share details on what health system General Catalyst would be looking to acquire, when an acquisition could happen or how much the VC firm plans to spend.
Dive Insight:
General Catalyst already has a network of 20 health systems across 43 states and four countries that trials and provides feedback on technology developed by its portfolio companies, but the venture firm is now angling for more control over a health system’s operations through direct ownership.
It’s a novel move from a VC firm, but the step was necessary to test new products without the risk aversion or cash shortfall typical of providers today, according to Harrison.
“We are very thoughtful about the sort of health system that we want to work with,” Harrison said. “More to come in the future, but let’s just say we believe that we need a proof of concept of this wild radical transformation of what healthcare should look like in the United States and beyond, and the only way we can do it is to have our own system.”
The goal is to generate sustainable profits for the health system that span decades, instead of the typical 10-year turnaround of a VC deal, Taneja said.
Along with streamlining operational inefficiencies, HATCo wants to implement value-based payment models, including fully capitated risk, to force it to apply resources creatively to keep patients out of emergency rooms and intensive care units, according to Harrison.
Taneja also pointed to generative artificial intelligence, or AI that is capable of creating text and images, as new technology that could help hospital operators overcome challenges like workforce shortages by automating certain jobs.
General Catalyst this year launched a startup called Hippocratic AI, which aims to co-develop large language models specific to healthcare data in tandem with health systems.
Other healthcare-focused venture firms also maintain close relations with provider groups, including Andreessen Horowitz, which notched a deal with Bassett Healthcare Network in New York to serve as a pilot site, and 7wireVentures, which has a coalition of hospital and insurer partners.
