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June 11, 2013 01:00 AM

Partners HealthCare invests in big data analytics firm

Joseph Conn
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    Noga

    Partners HealthCare System has joined with the investment arms of Kaiser Permanente and Indiana University in an $8 million equity placement in a Utah data warehousing and analytics firm, Health Catalyst, reflecting what some predict will be the next big category in health information technology spending.

    The $1 million equity investment in Health Catalyst by Boston-based Partners, the home of eight acute-care hospitals, including health IT pioneer Massachusetts General and the Brigham and Women's, follows investments made since February by Kaiser Permanente Ventures and CHV Capital, the venture capital entity of IU.

    Partners officials said the goal is to quickly migrate data to the warehouse from its patchwork of homegrown and legacy commercial systems. The warehouse will be designed to give the organization, long a leader in healthcare IT innovation, the agility to quickly bring in data from its own and other systems should the organization acquire other hospitals or group practices, and then use that data to analyze and improve its medical approaches to treating disease and managing the overall health of its patient population.

    “We do a lot of analytics today, but the data is siloed and our analysts spend a good portion of their time actually pulling that data together so they can do the analytics,” said Partners CIO Jim Noga. “The cool approach with Health Catalyst is they'll cut that time out so they can focus on analysis and not on data gathering.”

    The company's experience in developing applications for various disease states will speed up utilization of the data, Noga predicts. “We think we can get the value in a month, rather than measured in years,” he said.

    Until recently, only a few healthcare organizations had been on the leading edge of using big data, defined as information from multiple sources with lots of variability, coming in high volumes and at high speed, said Frank Buytendijk, a vice president with Gartner, an information technology research firm, in an audio clip on the firm's website.

    Now, as analytics and big data move into the wider province of early adopters, “2013 is the year of big data,” Buytendijk said. The focus, he said, is on how healthcare enterprises must invest in it.

    The movement drew early interest from the venture capital community. Health Catalyst's early investors included Norwest Venture Partners, Sorenson Capital and Sequoia Capital, which was the sole source of a $15 million, 2011 “series A” round of funding in the company, then called Health Quality Catalyst.

    The movement toward using data collected through EHRs to come up with healthcare solutions is gathering momentum. Last week, Seattle Children's hospital announced it had contracted with IBM for data analytics work, hoping for faster, “more-effective analysis to improve care and diagnosis for patients,” according to a news release about the deal.

    “What's happening,” said Todd Cozzens, a venture partner and senior adviser at Menlo Park, Calif.-based Sequoia Capital, “everyone has rushed into meaningful use and to get their EHR systems installed. Kaiser spent several billion in their Epic installation. We've made great progress because we've automated the process. But all we've done right now is just put into computers what we had on paper.”

    “Everyone is clamoring for their data,” said Cozzens, a co-founder and former CEO of Picis, a specialty EHR vendor, and a Health Catalyst board member. But providers today need to look at data not just from their own EHRs, but also from payers, their financial systems and other sources and “those EMR companies are not great at integrating things into their systems.”

    “I have not talked to a health system that is not looking for solutions in this area,” Cozzens said.

    Burton

    Health Catalyst CEO Dan Burton said spending on data analytics “will be dominant,” in the healthcare IT marketplace soon, now that more than half of physicians and three fourths of hospitals have quality, certified EHRs.

    “I'm not sure it will be as big as the investment in EHRs,” Burton said, “but if you look at other industries that have gone the way of paper to electronic records, I would certainly estimate (the healthcare industry) spending several billions of dollars a year on data warehouses. If you consider all analytics, it could be as a big as EHRs.”

    Major hospital EHR developers such as Epic and Cerner Corp. have data analytics components, but those have limits, Burton said.

    “They're good in their areas of expertise,” he said. “Cerner and Epic data stores, they're reasonably effective for analyzing the data in their EHRs. We don't try to replace that. We leverage that. None of them have been good at bringing in a dozen or two dozen sources of information into one warehouse. The whole purpose of an enterprise data warehouse is that you take data from multiple systems.”

    Burton said having customers as equity investors has deepened the relationship.

    “We feel like partners,” he said. “We're coming to the table with new ideas on both sides. We've taken our time, and they've taken their time, and we've gotten to know each other very well. It's like a marriage. We want it to be like that.”

    Follow Joseph Conn on Twitter: @MHJConn

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