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2013 Up-and-Comer: Health Catalyst, LLC

May 10, 2013
by David Raths
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As invaluable a resource as the Healthcare Informatics 100 compendium is, the “100” list encompasses only a small percentage of the total number of healthcare IT vendor companies active in the U.S. A much broader universe of smaller, dynamic vendor firms is always making inroads, and among that group are dozens of interesting companies worth knowing about. Over the next few days, we’re going to feature eight vendor organizations that we at HCI believe you should keep on your radar screen.

A team that spent years fine-tuning the development of data warehousing in the 1990s at Intermountain Healthcare has started making a big impact in the industry by replicating the success they had at Intermountain. The company that grew out of their work, Salt Lake City-based Health Catalyst, has formed partnerships with several large integrated health networks. It has raised over $55 million in multiple rounds of capital investment, grown to 80 employees and 90 hospital customers, and expanded its platform reach to over 20 million patients.

Here’s how it happened, according to CEO Dan Burton: Once they demonstrated the value of their data warehouse implementation, the co-founders, Dale Sanders, Steven Barlow and Tom Burton, first thought to set it up as an Intermountain business unit. But the Intermountain leaders decided not to expand on their focus as a provider, so five years ago Health Catalyst spun out as an independent entity. Their first customer was Allina Health in Minnesota. “They designed the data warehouse to work with their Epic system, and now Allina, like Intermountain, has become a national leader in health innovation,” Burton says.

Dan Burton

Dan Burton ran a private equity firm in the region. His brother, Tom Burton, was one of that firm’s co-founders. The founders asked him to look at it as an investment. “They were brilliant technologists but not as interested in the details of growing a business,” he says. “I was impressed when I saw the really important problems they are helping to solve.”

After Health Catalyst worked with Stanford University Hospital, the company received attention and eventually venture funding from Silicon Valley-based Sequoia Capital. “After they invested, I agreed to come on full-time as CEO,” Burton says. “The company was cash-flow-positive from day one and was not actively looking for capital, but Sequoia convinced us that there will be fierce competition and we needed to invest to maintain a lead,” he says. Health Catalyst invested in product development. Beyond data warehouses, users need apps that run on top of them. “We have built out over 100 apps. Other developers also can create them to sit on top of the data,” he adds, and customers can choose which to use. Health Catalyst has apps for internal and external reporting and population health management, for instance.

Other investors include Norwest Venture Partners, Sorenson Capital, HB Ventures, Kaiser Permanente Ventures and CHV Capital. As an example of recent customer success, Indiana University Health used Health Catalyst’s data warehouse to create a centralized repository of its clinical, financial and patient satisfaction information from across its Cerner-based network in just 90 days, the company says.