Value-Based Care

General Catalyst Launches HATCo, Sets Sights on Health System Acquisition


Last week’s action-packed news cycle brought plenty of headlines, but General Catalyst might have stolen the show with the announcement that its new company HATCo is on the hunt to acquire a health system that’ll serve as a proving ground for tech-enabled care.

While the blog post unveiling the Health Assurance Transformation Corporation left plenty to the imagination, it got the point across that “HATCo’s charter is not to disrupt healthcare systems,” but to be a blueprint for a better care experience guided by five foundational principles:

  • Stakeholder alignment between providers, payors, and patients  
  • More ‘patient’ capital with a decades-long time horizon 
  • Reorientation around platform innovations as opposed to cost reductions
  • “Radical collaboration” centered on an open platform and transparent best practices
  • Decisive pivot to a value-based care model that’s better for patients and business

Sitting at the helm of the new company is former Intermountain Health CEO Marc Harrison, a seasoned leader who promptly laid out HATCo’s three strategic priorities:

  • Work with GC’s 15+ health system partners to help execute their transformation journey 
  • Build an interoperability model where digital solutions can scale across the enterprise
  • Acquire and operate a health system to demonstrate a successful transformation

Investment firms are no strangers to hospital acquisitions and restructurings, but their ambitions have always stopped short of direct ownership and care delivery.

  • VCs are typically searching for outsized returns from their top performers to offset their misses, and hospital margins don’t exactly offer much room for a 10x outcome.
  • That said, the industry’s response seems to be cautious optimism, or at least a healthy appreciation for the fresh approach mixed with skepticism that VCs can put patient care ahead of shareholder value. 

The Takeaway

General Catalyst is flipping the standard approach to digital health on its head, acquiring a health system to serve as a sandbox for its portfolio companies as opposed to working with traditional providers to test new solutions. HATCo is the vehicle for a potentially seismic strategy, and its long-term focus might fill the holes in the Silicon Valley mantra of “move fast and break things.” The company’s real impact will ultimately be shaped by the acquisition target it lands on, but apparently we won’t have to wait more than a few months for that detail.

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