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$108M Analytics Outsourcing Deal Puts Health Catalyst At Risk For Allina Health Outcomes

By ESOutlook

Health Catalyst and Allina Health are sharing a major deal of $108 million, for over a period of ten years. Under the terms of the contract, announced Tuesday, Allina is sending its data warehousing, analytics, performance improvement technology, clinical knowledge and all of its related employees to privately held healthcare analytics company Health Catalyst. Health Catalyst sells services which predominantly deal with data warehouse platform and analytic applications. The technology vendor has a financial incentive to assure that Minneapolis-based Allina Health actually improves patient outcomes and reduces the cost of care. A committee that will govern the Health Catalyst-Allina partnership will annually make a list of clinical improvement projects, setting measurable outcomes goals, Health Catalyst said.

For these efforts, Allina health gets to receive full subscription rights to Health Catalyst’s technology, as well as an unspecified equity stake. About 20 percent of the contract value is dependent on Allina showing better outcomes and lower costs.

“It’s really a shared-risk contract,” Health Catalyst CEO Dan Burton tells Forbes.com. “It’s the first example that we’re aware of in healthcare” in which the analytics vendor’s payments are dependent on the client’s performance, Burton adds.

Allina CFO Duncan Gallagher says in a press release. “We expect that this process of using analytics to prioritize projects, in combination with risk-sharing economics, will encourage far more focus and alignment than is found in traditional health system-vendor relationships.”

It is widely regarded that, the Act will bring accountability in the relationship between health care connected organizations. Dan Burton states, “The healthcare industry has invested tens of billions of dollars in upgrading their technology without holding their technology vendors accountable.”

“This deal can negate the existing equation through its performance-based component. We hope that this becomes a trend in the industry,” Burton added.

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