https://mailchi.mp/de5aeb581214/the-weekly-gist-october-13-2023?e=d1e747d2d8

On Sunday, venture capital (VC) firm General Catalyst unveiled the Health Assurance Transformation Corporation (HATCo), a new subsidiary company which aims to acquire a health system to serve as a blueprint for the VC firm’s vision of healthcare transformation. 

Sharing this news on the first day of the HLTH 2023 conference in Las Vegas, General Catalyst declined to comment on which health systems are targets, or how much it is willing to spend, but CEO Hemant Taneja suggested that investment returns would be evaluated on a longer timeline than the typical 10-year venture capital horizon. 

Dr. Marc Harrison, the former CEO of Intermountain Health who joined General Catalyst in 2022, has been tapped to lead HATCo. The new company will build on General Catalyst’s previously announced partnerships with health systems, including Intermountain, HCA Healthcare, and Universal Health Services, with the goal of connecting healthcare startups with health systems in order to test and scale their technologies.  

The Gist: While private equity firms have backed health systems before, a VC firm expressing interest in health system ownership is a surprising development. 

Even on a longer timeframe than most venture plays get, it’s difficult to imagine a health system ever delivering the outsized returns VC investors usually demand. It’s possible HATCo’s true value will come from scaling and selling the services of tech startups in General Catalyst’s portfolio after vetting them at their health system “proving ground”. 

HATCo’s more ambitious aim to align payers and providers in a pivot to value-based care is a familiar one, but the new venture will find itself up against skepticism from insurers and other entrenched stakeholders, which has been difficult for even the most motivated health systems to overcome.