Health Catalyst acquires rival HCD

Brings in additional talent, new clients, new investors
By Bernie Monegain
09:13 AM
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Health Catalyst has acquired Health Care DataWorks, a company with roots in Ohio State University, and one that works on improving patient outcomes much like Health Catalyst does.

The deal means that HCD, with all of its 28 employees become part of Health Catalyst. They will work from their base in Columbus, Ohio. HCD customers, including – Cedars-Sinai Medical Center, El Camino Hospital, MemorialCare Health System, Orlando Health, and Tampa General Hospital – are now Health Catalyst customers and two are also investors.

The addition of 28 team members takes Health Catalyst to about 400 total employees. There were three when the company launched in 2008.

Cedars-Sinai and MemorialCare have become investors in Health Catalyst, joining other Health Catalyst customer-investors Kaiser Permanente, Partners HealthCare, Allina Health, and Indiana University Health.

[See also: A health IT partnership like no other.]  

Both companies are privately held, though Health Catalyst has made public its intentions for an IPO in a couple of years. The financial terms of the cash and stock deal, which closed on July 31, were not revealed.

[See also: Eyeing IPO, Health Catalyst lands $70M.]

Health Catalyst CEO Dan Burton sees the HCD deal as a perfectly aligned match. Health Catalyst executives have been admirers of HCD for many years, and well aware of its work. Both companies launched at about the same time and their vision is similar.

"We've had great respect for the founders of Healthcare Dataworks – their mission orientation, their focus on enabling health systems to use data to improve care, improve outcomes," Burton told Healthcare IT News. "We felt like for many years we were on the same team as it were, in terms of trying to help the broader industry view and harness the value of data and access that data in order to improve care."

Health systems are increasingly using data warehousing and analytics to leverage their terabytes of data for improvements in patient care and the bottom line. Burton sees the agreement with HCD as reinforcing Health Catalyst's commitment to helping healthcare organizations become more efficient and effective in their operations and care delivery.
   
Jyoti Kamal, now vice president of Health Catalyst, former president of HCD, is a recognized healthcare analytics visionary.

"We couldn't have found a better partner for HCD than Health Catalyst," Kamal said in announcing the deal. "The two companies' missions, cultures and operating principles are closely aligned and we share a commitment to working closely with healthcare organizations to improve the quality of care for all individuals. I look forward to taking that mission to the next level as part of the team at Health Catalyst."  
   
Burton said the merger strengthens Health Catalyst's ability to offer health systems the most complete and flexible healthcare data warehousing and analytics solution to help clients achieve meaningful outcomes improvement.
   
The addition of the HCD team helps the rapidly growing Health Catalyst in two major ways, he said.

One of them is being able to work with the five health systems that now become Health Catalyst customers, he said.

"We've long admired these health systems as innovators, as forward- thinking, as cutting edge," Burton said.  "We see real significant future shared innovations, shared developments with these health systems and others as well."
   
A model that's worked well for Health Catalyst, Burton said, is to develop something very useful with a customer that then can benefit other customers.

[See also: Health Catalyst shows Midas touch.]

"If you look at Cedars-Sinai track record, for example, Memorial Care's track record for coming up with innovative tools and solutions, they're very impressive," Burton said. "For a few years now I have personally been quite interested in pursuing ways we could benefit from that relationship.

As he sees it, "great ideas come from lots of places, and often they don't come from within the walls of Health Catalyst. So, we want to be really good learners and notice great ideas and insights and then be in a position to be a good partner to help commercialize those."
   
Another benefit from the merger, Burton added, is that it's been a challenge for Health Catalyst to find experienced, very talented data experts that have deep healthcare experience, have the technology experience that 's relevant in the areas of data warehousing and analytics.

"To a person we found that the HCD team members have that capability set," Burton said. "So the ability to pick up 28 really talented team members at once is very helpful to us."
   
"Cedars-Sinai has benefited significantly from its relationship with HCD over the past few years, and we expect our partnership to deepen and strengthen as HCD merges with Health Catalyst," said Darren Dworkin, CIO of Cedars-Sinai Medical Center and former HCD board member, in a statement.
   
Brant Heise, managing director of MemorialCare Innovation Fund, the health system's investment arm, noted that MemorialCare was an investor in HCD and now is "really looking forward to become an investor in Health Catalyst."
   
"I think it's a terrific acquisition on Health Catalyst's part to add in the Healthcare Dataworks' technologies and capabilities to strengthen the overall Health Catalyst perspective. For us as both investors and clients, we just see this as a tremendously good acquisition.