SALT LAKE CITY — With life sciences and high-tech emerging as dominant forces in Utah's robust economy, it may not be surprising that a local company has just achieved a $1 billion valuation — the rare unicorn status — by successfully merging the latest in big data analysis with a deep knowledge of modern health care systems.
Health Catalyst, an effort founded just over a decade ago by a team that was working for Intermountain Healthcare at the time, announced Thursday both a $100 million Series F funding round and hitting the $1 billion valuation benchmark.
CEO Dan Burton said the privately held company uses knowledge gleaned from a data set that includes medical histories of 100 million patients to both aid clinicians in zeroing-in on the best course of treatment action while allowing providers insight into how to best manage their operations to optimize efficiency, and control costs.
"At a fundamental level, we are a health care-focused data and analytics company," Burton said. "The reason that we help our clients aggregate and analyze the data is to help improve the care of their patients."
Burton said one of the biggest changes his company is helping health care providers implement is utilization of the records under their charge and analytics driven by an artificial intelligence engine that helps minimize mistakes and highlights areas where a clinic or hospital needs to focus more attention on.
"Health care as an industry is undergoing a pretty significant transformation right now, and one of the real drivers of that transformation is that, up until a few years ago, the information about you as a patient was still a paper-based operation," Burton said. "There is not a lot of analysis you can apply to paper records and that’s just started to meaningfully transform to digital.
"That digital crossover opens up this new horizon of significant opportunities to start harvesting and analyzing that data to help guide good decisions."
Various estimates peg wasted spending in U.S. health care in the neighborhood of $750 billion to $1 trillion annually. It's also the case that when outcomes are measured in relation to health care spending, the U.S. lags well behind other industrialized nations.
A report published last year in the Journal of the American Medical Association noted U.S. patients were spending significantly more, and in some cases almost twice as much, as other high-income countries on health care. For example, in 2016 the U.S. spent 17.8 percent of its gross domestic product on health care. This compares to spending rates that ranged from 9.6 percent of GDP in Australia to a high of 12.4 percent of GDP in Switzerland for the same year.
While outspending other top 10 high-income countries, the U.S. had the lowest life expectancies and highest infant mortality rate in the group.
Burton said Health Catalyst, based in Salt Lake City, is poised to help address those issues for clients that opt-in to its platform and analytics. He noted Intermountain Healthcare, a nationally recognized Utah-based health system in which early development of the system originated, has achieved outstanding results from leveraging its data. And, Burton said it's a path that could alter the cost to results equation on a national level.
"If you compare Intermountain's costs to health outcomes it is about twice as good, or half the cost, of our national average cost per patient for the same or better outcomes," Burton said. "If you use that as a microcosm for what's happening in the U.S., we as a nation could get so much better.
"And what we’re doing at Health Catalyst could enable those changes."
Fraser Bullock, Health Catalyst board chairman and managing director of Lehi-based Sorenson Capital, said his company has invested some $15 million over the last five years in Health Catalyst and, even among Utah's roster of highly successful life science and technology companies, Health Catalyst is distinguishing itself.
"We could see early on that there was import in their vision," Bullock said. "What’s been accomplished is nothing short of astonishing. They focus on saving lives and helping people who are in a moment of medical care needs that can have a very significant impact on their lives.
"It’s all about helping people."
Bullock related a story he'd heard from a mother who was seeking medical care for her daughter who was suffering from asthma. After a doctor visit, the mother returned shortly after, much to the surprise of the physician, who suspected his instructions hadn't been followed. When he asked her if she'd followed his direction, she showed him a folder containing his, and dozens of other instructions she'd received from other doctors who had seen her daughter and also worked for the same provider.
"Which one should I follow?" she asked the doctor. Bullock said the experience isn't an isolated one.
"What health care has been in the past is this doctor's opinion and that doctor's opinion and it's all one-off treatments," Burton said. "What Health Catalyst does is say, 'Let's take all the data and change this into a system. If that child has asthma, based on analysis, here's what we know are the best steps, best protocol in responses.'"
Burton said the company's current success tracks back to founders Tom Burton and Steve Barlow and their ability to envision how technological advances could have profound impacts on the delivery of health care.1 comment on this story
"They could see the problem and see taking it to the next level," Bullock said. "They built a foundation of understanding that technology can transform health care."
Health Catalyst's Series F equity and debt funding round was led by OrbiMed, a health care public and private market investment firm. The equity and debt funding will provide Health Catalyst with access to up to $100 million in capital.
Several existing investors, including Sequoia Capital, Norwest Venture Partners, Sands Capital Ventures, UPMC Enterprises and Kaiser Permanente Ventures, also contributed to the financing, which lifts Health Catalyst’s value above $1 billion.