The Health Data Analytics Hype Cycle

At the recent Healthcare Think Tank,  At the Crossroads: Technology and Transformation in Healthcare, sponsored by Dell, we had some very interesting discussions on a wide variety of topics. I will be highlighting some of the topics we covered in a few posts over the next couple months. At the first Think Tank three years ago at the HIMSS conference in Las Vegas I said that "Big data is the next big thing in healthcare." One of the hot topics discussed at this years Think Tank springing out of the HIMSS conference was health data analytics. I have also said that data analytics is the third wave of health IT that we're undergoing, after data capture and data sharing. It is this component - having robust analytics capabilities - that will provide the return on investment for the massive amount of government and private sector spending on health IT in the past few years.

During the session where we discussed data analytics Dan Munro, a contributor at Forbes, brought up the distinction between predictive analytics, proscriptive analytics, and persuasive analytics. Moving quickly past predictive analytics, which everyone seems to be working on, and into proscriptive analytics where actionable information is obtained and used. Then he introduces the notion of persuasive analytics. But sometimes the jargon we use can stand in the way when terms like "big data" and "analytics" become buzz words and lose some of their effectiveness. Dilbert also addressed this issue in the January, 9 2013 comic strip

Dan discussed the ability that retail giant Target has in consumer analytics, and went on to highlight the Gartner hype cycle and quickly walked through the Gartner Hype Cycle methodology which gives a good view of how a technology or application will evolve over time. According to Gartner each of the Hype Cycles drills down into the five key phases of a technology’s life cycle:

• Technology Trigger: A potential technology breakthrough kicks things off. Early proof-of-concept stories and media interest trigger significant publicity. Often no usable products exist and commercial viability is unproven.
• Peak of Inflated Expectations: Early publicity produces a number of success stories—often accompanied by scores of failures. Some companies take action; many do not.
• Trough of Disillusionment: Interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters.
• Slope of Enlightenment: More instances of how the technology can benefit the enterprise start to crystallize and become more widely understood. Second- and third-generation products appear from technology providers. More enterprises fund pilots; conservative companies remain cautious.
• Plateau of Productivity: Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined. The technology’s broad market applicability and relevance are clearly paying off.

In it's recent report "Top Actions for Healthcare Delivery Organization CIOs, 2014: Avoid 25 Years of Mistakes in Enterprise Data Warehousing" Gartner makes the point that healthcare has a compelling need to use more information, and use it better. Enterprise data warehousing (EDW) is an important analytics component addressing various needs: The integrated clinical and business EDW; EHR; claims/revenue cycle; ERP; cost accounting; and patient satisfaction data.

Now that we have widespread adoption of EHRs, providers should leverage EHR data by advancing retrospective and real-time analytics because the superior use of analytics will be a dominant factor for success over the next 4-5 years. As a gushing of new data streams are on the way, CIOs cannot afford the cost, time or agony of repeating classic blunders (avoiding the "nine fatal flaws" in business operations improvement), just to get to an integrated warehouse with clinical data. They point out the Integrating business/financial and clinical data into an effective EDW is the top new healthcare IT initiative and will be necessary to succeed.

Over half of the early stage initiatives Gartner is tracking are either pure analytics (green) or contain an analytics component (yellow).

Hype Cycle for Healthcare Provider Applications, Analytics and Systems, 2013

Source: Gartner (February 2014)

In it's report Gartner stresses the need for strong information governance and the importance of data quality. They also warn not to overestimate the value of a commercial vendor's data model, to avoid underscoping the total effort and personnel needs, and never treat an EDW as just another module from the EHR vendor. They acknowledge the deep need for analytics solutions and show that the shift in payment models fueling this need includes both incentive-based and risk-reward payment models.

In the September 2012 Electronic Healthcare, a new eight-stage Analytics Adoption Model similar to the seven-stage EMR Adoption Model (EMRAM) from HIMSS Analytics was proposed. This model is being widely used to help analytics companies to inform their strategy and product roadmap. An excellent whitepaper that explains the model in greater detail is available HERE. Now HIMSS Analytics has partnered with the International Institute for Analytics (IIA) to create a benchmarking survey designed to measure and score clinical business intelligence and analytics maturity in healthcare organizations. They will use the DELTA model (data, enterprise-focus, leadership, targets and analysts) to assess analytic capabilities. The survey measures 33 competencies based within the DELTA model framework to assess the importance of each competency to the organization and the organization’s effectiveness in performing each competency.

As the Gartner report cautions over-reliance on vendor data models, one thing that I am interested in seeing is: Who will win the day in the exploding health data analytics market, EHR vendors or specialty analytics vendors? I do not think that specific EHR vendors, while they hold a great deal of data and are a critical piece of the puzzle, have the ability to aggregate all of these disparate data sources that will enable them to provide a comprehensive solution. So it will likely take partnerships between EHR vendors, HIE vendors, and analytics vendors to provide the true value that health systems will need to thrive in a transformed healthcare marketplace.

Healthcare Analytics Gets a Major Funding Boost and Kaiser Chooses a Vendor

Data warehousing and analytics company Health Catalyst has raised $41 million in a series C funding round led by existing investor Sequoia Capital reports the Wall Street Journal. The investment enables Health Catalyst to further build out its healthcare analytics platform and assist its clients in systematically and permanently improving efficiency and effectiveness in care delivery. The company plans to invest $50 million in product development over the next two years, including production of the next 200 advanced content-driven clinical applications on its roadmap. This $50 million will be money well spent if Health Catalyst is going to continue to take on giants like IBM, Oracle, other analytics vendors, and also the large EHR vendors that would like to keep big slices of the health data analytics pie.

"We are thrilled that our existing investors chose to continue their strategic relationships with us, leading the way to major innovations for US healthcare,” said Health Catalyst CEO Dan Burton. "As more healthcare organizations are coming to understand, data warehousing and analytics are foundational to their success under new payment and risk models." This latest round brings the total amount raised by Health Catalyst to nearly $100 million. Last year, the company was one of the top digital health investments, according to Rock Health's 2013 Midyear Digital Health Funding Update.

Introductory Video to Health Catalyst

A year ago Health Catalyst increased its Series B round by $8 million, with participation from Kaiser Permanente Ventures, the corporate venture capital arm of Kaiser Permanente, and CHV Capital, a venture capital fund guided by the strategic objectives of Indiana University Health, Indiana’s largest healthcare system. Indiana University Health had chosen Health Catalyst reporting and advanced analytics solutions and built out an enterprise data warehouse in just 90 days. Regarding the investment last year Kyle Salyers, Managing Director at CHV Capital, said, "Healthcare data warehousing and analytics is a necessity in order to succeed in the future of healthcare. It will bring actionable information to the point of care and to administrative leadership. We and our colleagues at IU Health see Health Catalyst as the market leader in delivering a data warehousing platform and analytic accelerators with scale, flexibility, speed to deployment, and ultimately a tangible return on investment."

Now Health Catalyst has also announced that Kaiser Permanente, the nation’s largest healthcare delivery system, operating 38 hospitals and employing more than 17,000 physicians serving 9.1 million members, is also adopting the Health Catalyst technology platform improve quality, eliminate waste and lower costs. This brings the total of company’s clients now operating over 135 hospitals and 1,700 clinics that account for over $130 billion in healthcare delivered annually. This is a substantial piece of the health data analytics market and Health Catalyst is certainly one to watch. Last year Chilmark Research named Health Catalyst the highest-rated overall solution in the Chilmark 2013 Clinical Analytics for Population Health Market Trends Report, calling the company a "clear standout." Also research firm KLAS claimed that Health Catalyst’s platform is a "newer and more effective way to approach EDW" in the report Healthcare Analytics: Making Sense of the Puzzle Pieces. KLAS gave Health Catalyst the highest performance rating (90) in the category of healthcare analytics companies, which also included Deloitte, Explorys, Healthcare Data Works, IBM, Oracle, Microsoft, SAP, and Teradata.

Todd Cozzens, venture partner at Sequoia Capital, told Healthcare IT News in an interview last year that Health Catalyst is better than "the IBMs and Oracles of the world."

"It's much more intuitive, much more clinically focused," Cozzens said. "The other piece is this incredible content they have around waste reduction, LEAN process, Six Sigma. You take these two core competencies, and it goes way beyond an electronic data warehouse. It's a performance management and care transformation system all in one."

As Zina Moukheiber points out in Forbes, Health Catalyst is muscling its way into Oracle and IBM territory. But Health Catalyst is developing data management tools that are uniquely suited for health care with laser focus on this industry. “Clinical data is so much more complicated that managing bank accounts or shoe sizes,” she quotes Dan Burton as saying. She also points out that Oracle typically captures data and converts it into a specific format, whereas the Health Catalyst late-binding architecture allows for more flexible manipulation of data aggregated from electronic health records, thus making its system faster to implement, and easier to query.

I have called 2014 the Year of Health Data Analytics and said that I believe that we are moving through three phases: data capture, data sharing, and data analytics. Data capture and sharing have been driven primarily by meaningful use incentives, while analytics will provide the ROI from these investments. It is the ability to do interesting and useful things with these data that will build out the infrastructure to support new payment and care delivery models. Business intelligence and analytics tools will be critical in order to thrive in the new healthcare marketplace. Much of the success of these analytics platforms will depend on the underlying architecture and the late-binding data warehouse model used by Health Catalyst holds the most promise today.

(full disclosure, I have provided strategic advising services to Health Catalyst).