Health Catalyst spins data into gold

Health Catalyst has landed $41 million
By Bernie Monegain
12:00 AM

Six-year-old Health Catalyst has not only landed $41 million in a third round of funding, but also has lured two of the big-name health systems in the country to implement its data warehousing and analytics technology.

The company announced the new funding and the big-get customers at the end of January. The total venture investment totals nearly $100 million.

The new clients are on the West Coast and the East Coast – Kaiser Permanente and Partners HealthCare. At Kaiser the technology rollout will be across the system, all 38 hospitals. The implementation at Partners, among the most prestigious health systems in the country, will also be across the enterprise.

The investment comes from existing investors Sequoia Capital, Norwest Venture Partners, Kaiser Permanente Ventures, Sorenson Capital, CHV Capital – an Indiana University Health Company -- and Partners HealthCare. The funding will make it possible for Health Catalyst to build out its healthcare analytics platform. The company plans to invest $50 million in product development over the next 24 months, including production of the next 200 advanced content-driven clinical applications on its roadmap.

"We are thrilled that our existing investors chose to continue their strategic relationships with us, leading the way to major innovations for US healthcare," Health Catalyst CEO Dan Burton said in announcing the funding and new clients Jan. 28.

Burton sees both the Parrtners and the Kaiser deals as an opportunity to work with recognized healthcare leaders.

The Kaiser work brings a slew of new challenges and new possibilities because of the scope of project.

"With Kaiser it's a whole different level of scale that's required," he said. "The ability to demonstrate the platform capability in handling massive amounts of data coming from 18 different regions and 35 different hospitals and all kinds of clinics in all areas of the country – it's just a fantastic experience for our company. It's a perfect opportunity for our platform to really demonstrate its skill."

The existing applications and the new ones under development provide a way for health systems to "systematically reduce waste and improve care delivery, across every major clinical and workflow area," Burton said.

Last year proved to be a productive one for Health Catalyst, which at 6 years old, could be considered the new kid on the block in the realm of data warehousing and analytics.

According to Burton, the company increased the number of completed platform and application products to 100, and also increased its bookings by a factor of five, year over year. It scaled to be on track to produce positive cash flows in 2014, not counting the product development funding from its investors.

In a recent report, research firm KLAS called Health Catalyst's platform a "newer and more effective way to approach EDW." KLAS gave Health Catalyst the highest performance rating (90) in its category, which also included Deloitte, Explorys, Healthcare Data Works, IBM, Oracle, Microsoft, SAP and Teradata.

Todd Cozzens, venture partner at Sequoia Capital, told Healthcare IT News in an interview a year ago that Health Catalyst is better than "the IBMs and Oracles of the world."

"It's much more intuitive, much more clinically focused," Cozzens said. "The other piece is this incredible content they have around waste reduction, LEAN process, Six Sigma. You take these two core competencies, and it goes way beyond an electronic data warehouse. It's a performance management and care transformation system all in one."

Charles Macias, MD, an attending physician and director of the Center for Clinical Effectiveness and the Evidence-Based Outcomes Center at Texas Children's Hospital in Houston, said before employing Health Catalyst technology, it would take six months or longer to mine the right data needed to gauge whether a certain treatment was working as it should. Today, he and his team can have the data within 24 hours, often in less time.

New Health Catalyst clients in 2013 besides Kaiser and Partners HealthCare include: Crystal Run Healthcare, a multi-specialty group in New York State, Memorial Hospital at Gulfport, a 445-bed health system in Mississippi; NorthBay Healthcare, a 182-bed health system in the San Francisco Bay Area; and Wisconsin Children's Hospital.

Health Catalyst also completed major contract extensions in 2013 with Indiana University Health, North Memorial HealthCare, Providence Health & Services, Stanford Hospital & Clinics and Texas Children's Hospital.

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