Who should control Summa Health? Akron group wants a say in hospital’s future

AKRON, Ohio — An Akron grassroots organization on Friday challenged the proposed sale of Summa Health to a venture capital firm, stating that the $485 million price tag for Summa Health’s acquisition is less than the health system’s true value.

The group, called Summa is Not For Sale, also said during a virtual press conference Friday that Akron-based Summa is financially strong and does not need the sale to survive.

Summa is Not for Sale issued a list of 14 demands that it says must be met before the sale is finalized.

It’s important to protect high-quality patient care and ensure that Summa remains community-focused after it becomes a for-profit system, said Summa is Not For Sale organizer Matthew Charlebois of Akron.

The group called on Ohio Attorney General David Yost, who is reviewing the sale, to impose a six-month moratorium on any state decisions on Summa’s conversion from nonprofit to for-profit, to allow time for public hearings.

“Summa is Not For Sale wants to prevent the institution from being ravaged by venture capital profiteers,” Charlebois said during the news conference. “Akron-area politicians have surrendered this issue. They did not even pretend to fight.”

Summa Health announced in 2024 it would become a wholly owned subsidiary of Health Assurance Transformation, a new business venture owned by venture capital firm General Catalyst.

The deal, subject to regulatory approval, will likely be finalized in mid-2025. Summa is the largest employer in Summit County with more than 7,000 employees.

Summa is Not For Sale’s demands include that an outside appraiser determine the current fair market value of Summa Health, that the health system maintain its same level of charity care and that hospital prices are not raised by more than the cost of inflation for the next five years.

Summa’s proposed purchase price of $485 million is fair, said hospital spokesperson Mike Bernstein.

“(The price) was determined following a fair market valuation conducted by an independent third-party company that is recognized as a national expert in healthcare transaction advisory services,” Bernstein said in an email, noting that additional information is available at SummaHealth.org/Future.

Summa Health and Health Assurance have said that the acquisition will stabilize the financially struggling health system and allow it to grow in the future. Summa and Health Assurance have pledged to keep jobs in Akron, maintain a high standard of patient care and funnel profits from the sale into a community foundation focused on promoting the region’s heath.

The infusion of cash from its acquisition will help Summa concentrate on medical care by retiring $800 million in debt, Summa said when the sale was announced in early 2024.

But critics of the deal point to other instances in which hospital conversions to for-profit status led to an emphasis on profits, decreased patient safety and hospital closures.

“Our demands are made to ensure the long term viability of Summa Health,” Charlebois said. “What is fundamentally at stake is not this or that policy, but the question of who controls our health care. Who controls Summa? Who should direct and oversee its operations? Should it be a venture capital firm? Should it be a wealthy board of executives, or should it be the people of greater Akron and the Summa workers themselves?”

Do not sell buildings, enrich executives, group says

Here are Summa is Not For Sale’s list of demands; links and citations were provided by the group:

1. “Have an outside appraiser determine the current fair market value of Summa Health. An evaluation using the Enterprise Value method for Summa Health, for example, values the firm at $1.6 billion, far greater than the current $485 million sale price.”

Enterprise value is a commonly use valuation, said Jeff Barge, a volunteer researcher for Summa is Not For Sale. The enterprise value results in a more accurate and fair valuation of Summa than the $485 million that Health Assurance is paying to acquire Summa Health, Barge said.

In 2023, Summa had total revenue of $1.8 billion, but ended the year with an operating loss of $43.5 million, according to data the health system supplied to cleveland.com.

In 2024 unaudited numbers, the health system had a total revenue of $2 billion, but ended the year with an $8 million loss, according to the health system .

2. “Pay the full sale price of Summa Health into the new Summa community foundation. The foundation’s structure and regulation should be fully public and transparent.”

Health Assurance has said that the sale’s remaining cash, after closing adjustments, will fund a new, separately governed community foundation to benefit community health in Greater Akron.

3. “Pay the $153 million in cash and cash equivalents currently held by Summa Health into the new Summa community foundation. Research based on a Sept. 29, 2024 Summa Health document filed on the Emma municipal finance tracking system indicates that Summa Health has $153 million in cash and cash equivalents on hand as of that date.”

This new, separately governed community foundation will be focused on benefitting community health in Greater Akron, the companies said earlier.

Last year, Summa CEO Dr. Cliff Deveny declined to say how much money might be funneled to the new Summa community foundation from the health system’s sale. That determination will be made when the sale closes, Deveny said.

4. “Have no less than 33% of the Summa community foundation board positions be community-based representatives, as well as representatives appointed by both the city of Akron Mayor Shammas Malik and Summit County Executive Ilene Shapiro.”

Summa previously stated that the new community foundation will have 13 board members, two-thirds from Summa-related board members and committee participants, and one-third from Akron and the five surrounding counties. The new foundation will support programs targeting the social determinants of health.

5. “Provide the same level of charity care provided to the Akron community as there was prior to the sale. This should be based on current thresholds for financial assistance and calculations for amounts charged to patients.”

In 2022, Summa spent $11.5 million on charity care, and $95.3 to make up the difference between Medicaid payments and the actual cost of care, according to health system data.

6. “Do not sell the buildings and other properties to a real estate investment fund in order to pay General Catalyst a fat dividend, then have the hospital rent those properties back at an enormous sum. Two private equity-owned hospital systems – Stewart Health Care and Prospect Medical Holding – have recently gone into bankruptcy because of these sale-leaseback deals, causing hospital closures and poor quality of care.”

California-based Prospect Medical Holding — which operates 16 hospitals across the country — filed for bankruptcy this year and plans to sell hospitals.

Steward Health Care, a for-profit system, filed for bankruptcy last year, press reports said. Steward-owned Trumbull Regional Medical Center and Hillside Rehabilitation Hospital, both in Warren, originally were slated for closure. But the facilities remained open when a Michigan-based for-profit health system took ownership.

7. “Summa executives must commit not to enrich themselves as a result of this sale. In the case of Stewart Health Care, the CEO paid himself $250 million, and at Prospect Medical the CEO got a $90 million bonus.”

8. “Commit to not increasing hospital prices by more than the cost of inflation for the next five years. Studies have shown that once acquired by private equity, hospitals raise prices by an average of 32%.”

9. “Maintain the same high level of quality care. A Harvard study shows that hospital-related injuries rise by an average of 25% after acquisition by private equity.”

10. “As the main cause of hospital-related injuries in private-equity acquired hospitals are due to nursing layoffs, Summa must commit to preserving physician, nurse, and auxiliary staffing to patient ratios in accordance with the American Nursing Association and American Medical Association guidelines.”

11. Commit to maintaining departments that provide services for women and LGBT+ people, specifically (but not limited to) the maternity ward, the Women’s Center, and the Pride Clinic.

12. “Pay off the student loans of current employees who are participating in the Public Service Loan Forgiveness program and establish an equivalent loan forgiveness program for future employees.”

13. “Recognize the right of all employees to unionize and collectively bargain for improved working conditions and remuneration.”

14. “Maintain at least the current level of providing training to medical students, interns, residents, and fellowships for students from NEOMED and other medical schools in Ohio.”

Some say sale is a positive development

Since the sale was announced, Health Assurance and Deveny, Summa’s CEO, have said that it will allow the health system to continue providing quality care.

Health Assurance has committed to $350 million in capital funding within the first five years, and $200 million for strategic investments over the first seven years.

The hospital system’s headquarters will remain in Akron and all employees will be moved to the new company.

While the sale will not lead to cuts in healthcare services or fewer doctors, “the way we deliver care will continue to evolve,” Deveny has said.

Sykes says Akron residents have hope, skepticism about deal

Some Akron residents welcome Summa’s sale because it will give the health system financial stability, while others feel trepidation about what can happen when private equity takes over, U.S. Rep. Emilia Sykes told cleveland.com earlier this month.

“There is a bit of hope, but there is some skepticism with what this looks like moving forward,” she said.

Sykes has met with Health Assurance and Summa representatives to ask questions about Summa’s future, such as the possibility the for-profit health system might limit care, or sell property then lease it back to the hospital.

Some information could not be shared because the deal is still under review by the state attorney general, Sykes was told.

“I’ve been bugging them and asking them questions that they don’t want to answer,” she said. “I want to make sure people have access to good quality, affordable health care.”

She’s also aware of the challenging realities that Summa faces.

The system has a high Medicaid population, Sykes said. About 21% of Summa’s patients were Medicaid recipients in 2022 and 2023, according to a Summa financial report.

If the federal government’s proposal to cut funds going to states for Medicaid, and patients who use Medicaid lose their health care coverage, a for-profit Summa could decide to sell buildings or eliminate areas of care to make up the budget shortfall, she said.

Sykes, who has a master’s degree in public health, listed behavioral health, addiction and maternity care as Akron’s top health needs. They are also often the first areas to be eliminated because they are expensive and rarely profitable, she said.

“Maternity care is so important because we have such high maternal mortality and infant mortality in our state and particularly in our area,” she said.

Julie Washington covers healthcare for cleveland.com. Read previous stories at this link.