Analytics Startup Health Catalyst Nets $41 Million (Wall Street Journal)

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[Written January 27,2014 by Clint Boulton]

Data warehousing and analytics startup Health Catalyst has raised $41 million in a series C funding round led by existing investor Sequoia Capital. Health Catalyst CEO Dan Burton said the company, which makes software that manages hospitals’ electronic information, will use the money to develop more than 200 applications designed to meet federal requirements for improving care at reduced costs.

The funding comes as CIO requirements for managing electronic health records are evolving, says Todd Cozzens, a partner of Sequoia. For the last decade, large hospitals have spent on average between $200 and $300 million for software that digitizes, stores and manages health care records he said. But the value of such electronic medical record systems is limited because they don’t effectively allow hospitals to query the data they capture, he said. “Hospitals and physicians are producing this tremendous amount of data, and they are saying: ‘Now what do I do with it?’” Mr. Cozzens said.

The question is crucial. With Medicare and Medicaid now reimbursing hospitals based on the quality of the care they deliver, rather than the volume of patients they see, hospitals need to measure the effectiveness of health services provided. And they also need to find ways to lower costs by reducing unnecessary treatments, as well as readmissions.

Health Catalyst’s software processes and analyzes hospitals’ clinical data as well as administrative and financial data.

The funding round, which closed Jan. 9 and will be announced on Tuesday, comes one year after the Salt Lake City company received $41 million in funding from Sequoia, Norwest Venture Partners, Kaiser Permanente Ventures, CHV Capital and Sorenson Capital Partners. Since that time, Health Catalyst has boosted revenues from $8 million to $45 million, built 60 new applications and inked Kaiser Permanente and Partners HealthCare as new customers, Mr. Burton said.

Health Catalyst faces tough challenges from tech companies such as IBM Corp. and Oracle Corp., which also offer data warehouse and analytics tools for the health industry, as well as electronic health care software providers that are trying to augment their suites. Mr. Burton said his company’s sole focus on health care makes it an attractive alternative. “We have a clinical-oriented understanding of everything we do from a platform and application perspective,” Mr. Burton said.

[Written January 27, 2014 by Clint Boulton]

View Original WSJ Article Here