Hospital Signs $100 Million Deal With Health Catalyst To Improve Patient Outcomes (Forbes)

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[Written 01/06/2015 by Zina Moukheiber]

Penny Wheeler, the CEO of Allina Health, calls it a conundrum. The $3.7 billion (revenue) Minnesota-based health system is part of a group of accountable care organizations (ACOs) or health care providers selected by the government to test the move from fee-for-service to payment based on patient outcomes. Allina has done so well keeping patients out of the hospital, that by some measures it is actually losing revenue. And while it scores way above other ACOs in areas such as diabetes management, it has yet to show savings from the Medicare program which rewards health care providers for lowering costs.

There’s no turning back. “We want to help drive that reform. We don’t want to be incentivized for things that don’t make sense; fee-for-service doesn’t result in best patient outcomes,” says Wheeler, an obstetrician-gynecologist.

To ride the transition and hopefully make money, Allina is paying Health Catalyst, a seven-year-old data warehousing and analytics company $100 million over 10 years—20% of which will be tied to Health Catalyst delivering on its goal to ferret out gaps in care and reduce costs. In exchange for equity, Allina is also turning over intellectual property, namely predictive analytics software to reduce hospital readmissions. Wheeler declined to disclose Allina’s stake, but it makes the health system the biggest strategic investor in Health Catalyst. Other customers that have invested in the company include Kaiser Permanente and Partners HealthCare. The company has raised nearly $100 million. (See this story.)

Health Catalyst has developed data management tools that are uniquely suited for healthcare.Oracle ORCL -1.03%, for example, typically captures data and converts it into a specific format, whereas Health Catalyst allows for more flexible manipulation of data–which it aggregates from electronic health records, making its system faster to implement, and easier to query. One feat consisted of warehousing 14 billion rows of data within 90 days—a process that can take years… Click to view entire article

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