Health Catalyst (HC) is arguably the strongest, best-of-breed vendor for clinical data analytics in the market today. And as a best-of-breed vendor, it has been able to stay one step ahead of its leading competitors, Epic and Cerner – though as former Intel CEO Andy Grove once pointed out, “only the paranoid survive”, certainly holds true for Health Catalyst as Epic and to a lesser extent Cerner, are heavily investing in their analytics solutions.
Brian Edwards and I had the pleasure to attend the recent HC Analytics Summit, providing us an opportunity to get a pulse on HC, their clients, and their strategy going forward.
- Health Catalyst continues to grow at a healthy pace with clients rapidly migrating to their cloud-hosted solution. Today, nearly 95% of revenue is recurring.
- Their vision forward is to become the “Systems Integrator (SI) of Data” – a ripe opportunity that few to date have capitalized on.
- Not all is perfect. The company’s care management solution did not meet market expectations, and their efforts in Natural Language Processing (NLP) remain nascent.
- The company has no intention of being purchased but plans to IPO, likely in 2019 if market conditions are favorable.
The Health Analytics Summit (HAS) brought together about 1500 attendees. It was a geeky crowd of data scientists, analytics team leaders and a smattering of executives. Sessions were by and large well attended though the level of discussions in the few I sat in on was modest. Client testimonials were plentiful, most clearly showing significant savings. However, one has to question what were the sunk costs on a given project when claimed savings were a paltry ~$65k.
Health Catalyst has grown quickly with over 700 employees currently. A couple of secrets to HC’s continuing success are:
Strong focus on their employees
Unlike most vendor organizations that put their customers first, Health Catalyst goes to great lengths to ensure their employees are engaged – they are the number one priority. Their belief: an engaged employee is a happy employee. A happy employee will strive harder to make customers equally happy. I’m surprised more companies do not follow a similar strategy.
Ensuring client success
While all vendors want their customers to be successful, Health Catalyst takes it one step further by guaranteeing to clients a CFO-verifiable 2:1 return on investment (ROI). In speaking to one client, she mentioned how some in her organization have pushed back on the costs of Health Catalyst. I asked her are they seeing that expected 2:1 ROI? She gave an emphatic Yes! – which she went on to confirm hushes critics.
A key message from CEO Dan Burton to attendees is their desire to remain an independent company that is mission-focused – “to unleash data as a catalyst of dramatic healthcare improvements.” To date, that message has resonated well across their growing provider installed base. But I wonder: Is it enough if the company plans to do an IPO?
The provider market is just getting started in understanding how to effectively use data and its insights to affect care delivery – no doubt there is still plenty of runway here. However, there are enormous opportunities outside the confines of this market. While I never wish to see HC lose sight of its mission, its long-term success, including a future IPO, will require a far grander vision that goes beyond the provider market to serve all stakeholders in the healthcare industry.