With $41M Now In The Bank, Health Catalyst Wants To Help Solve Healthcare’s Big Data Problem

With big data playing an increasingly critical role in healthcare and with the pervasiveness of archaic infrastructure and lack of data portability in health systems and hospitals, data warehousing startup Health Catalyst sees a big opportunity to help fix this problem. And, at least for now, investors appear eager to buy in. In January, the startup raised a whopping $33 million in series B financing from Norwest Venture Partners (NVP), Sequoia Capital and Sorenson Capital.

And, today, Health Catalyst is adding more coin to its coffers, announcing that it has increased its Series B round by an additional $8 million, which sees Kaiser Permanente Ventures and CHV Capital (a venture capital fund guided by Indiana’s largest health care system) join the startup’s roster of investors. The additional capital brings its series B total to $41 million.

But why the big moola? Well, while startups like Practice Fusion have helped push Electronic Health Records to the forefront of the digital health conversation, many EHR systems aren’t all they’re cracked up to be in their promises to hospitals and health systems.

Hospitals have been using warehousing software for a long time now, but porting health data to the cloud or some other digital storage resource is one thing — actually providing visibility and insight into those data resources is another. Without the latter, EHRs instead just become a significant contributor to the $750 billion wasted annually by the U.S. healthcare system.

Furthermore, with Obamacare mandating that health providers must make the transition to digital health records in the over the next two years, the heft and quality of EHRs only stands to become an increasingly critical issue for the country’s hospitals and health systems.

Screen shot 2013-02-28 at 2.25.05 AMBy providing a data warehousing platform that has been built specifically for the healthcare industry, the five-year-old Health Catalyst believes it’s well-positioned to take advantage of Obamacare’s digital mandates and to help providers get more out of their EHR systems. Working in conjunction with EHRs (like Cerner and Epic, for example) to unlock the big data living in EHR systems, Health Catalyst aims to give hospitals and health providers the tools they need to better organize, visualize and utilize that data so they can focus on better outcomes and begin eliminating that waste.

Going forward, simply having an electronic health record won’t be enough, hospitals and providers need an agile, speedy data warehouse to help them visualize critical patient data in realtime, for example. Health Catalyst gives providers access to an analytics suite that enables them to drill down into that data and prescribe medications or suggest treatments that are based on a patient’s individual history.

Like other business intelligence tools, Health Catalyst wants to give hospitals easier access to their datasets and the ability to segment data to view data from all of its diabetes patients, for example, to better inform individual treatment — what worked and what didn’t. The startup’s software platform also allows hospitals to set up alerts to keep them informed of cost discrepancies and declining quality of care.

Health Catalyst is far from crazy in identifying a massive pain point (and opportunity) in EHRs and health data in general. It really wouldn’t be surprising to see some of the big enterprise software and storage providers move more aggressively into this space. Microsoft, IBM and Oracle, for example, all have products that could, with some adaptation, serve this market effectively. But right now they lack the clinical focus. Box.net, too, could be another contender.

For now, Health Catalyst is off to a good start, as its software has been adopted by over 80 hospitals across the U.S. and collectively impacting over 20 million patients.

Find the startup at home here.