Venture capital and healthcare startups have had a tumultuous relationship over the past few years. Before the pandemic, the majority of venture investment in health tech and healthcare startups came from VCs focused on the sector. That changed in 2020, when seemingly every flavor of VC flooded into the market.

Much of this newfound interest was seemingly driven by investors chasing pandemic tailwinds and reacting to FOMO as opposed to a desire to build a lasting healthcare portfolio. In fact, many VCs retreated from the sector shortly after the world started returning to normal.

Not everyone did, of course; some decided to double down. General Catalyst was one of those, and that stance has resulted in an interesting development this week.

At the HLTH conference in Las Vegas last weekend, General Catalyst said it was launching a new initiative, Health Assurance Transformation Corporation (HATCo). The new project will work with the firm’s portfolio companies and existing partnerships with healthcare institutions to advance the concept of health assurance, which aims to get consumers to interact with healthcare provided on a proactive basis.

General Catalyst declined to comment on the HATCo effort beyond the blog post it issued.

Now, a lot of VC funds set up such partnerships with large entities for the sake of their portcos — often replete with lofty goals and mission statements — but this project is different. Why? Because a key plank of the HATCo initiative is that General Catalyst intends to buy an entire healthcare system.

There’s a lot to unpack here

Why would a VC firm want to own its own healthcare system? Why would it want that stress or such a costly asset when it could just continue with its healthcare partnerships?

It appears that General Catalyst has been moving in this direction for years — and I’m not just saying that because I met a VC this week who seemed generally confused that people were so surprised by this news.

The venture firm had built a sizable healthcare startup portfolio well before the HATCo announcement. In fact, it has been the most active VC investor in healthcare since the beginning of 2020, according to PitchBook. The firm has raised more than $1 billion specifically for health tech startups to date. It also launched multiple SPACs in 2020 on its hunt for companies that could become health assurance platforms.