Allina Health said it will outsource its entire analytics efforts to Utah-based Health Catalyst, in a deal valued at nearly $110 million over 10 years.
The deal not only represents a major shot in the arm for Health Catalyst, but it also includes a shared-risk element that both sides view as unique and potentially game-changing for the industry.
The deal includes “combined technologies, clinical content and front-line personnel” and all data warehousing going to Health Catalyst, which was developed out of Intermountain Healthcare in Salt Lake City. In return, Allina Health, one of Minnesota’s biggest health systems, will get full use of the analytics program and an undisclosed stake in Health Catalyst.
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Approximately 20 percent of Health Catalyst’s fees over the course of the 10-year contract are”at-risk” and directly tied to measurable outcomes improvement, Health Catalyst CEO Dan Burton said.
For Health Catalyst, the deal is major validation, Burton said, adding that both sides view the deal as a potential model for the industry.
“We hope that this model of shared accountability for outcomes improvement, extending to include technology vendors, becomes more the rule rather than the exception in healthcare,” he said.
What stands out is the shared-risk element, which is not typically seen between systems and vendors and which officials hope will lead to meaningful and tangible savings.
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“The economics of the relationship align incentives around technology as a means for improvement, not an end in itself,” Burton said.
Allina Health said it will become a “living laboratory for front-line outcomes improvement,” and that the model will be pivotal in addressing the shifting payment landscape in healthcare.
“As payment models continue to transition away from fee-for-service, it becomes increasingly vital for health systems to deeply understand their data in order to pinpoint inefficiencies and then reduce those inefficiencies,” said Duncan Gallagher, CFO of Allina Health, in a statement. “This partnership is designed to accomplish that goal in a measurable, scalable, repeatable manner.”
Economic rewards will be based on the attainment of clearly spelled-out goals. “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,” Gallagher said.
Burton added that Allina’s predictive analytics software, used in areas like spine and stroke care, has been particularly effective, and that now they will be commercially available within a few years, giving the industry as whole a valuable tool (and, undoubtedly, further gain for Health Catalyst).
Allina Health is a $3.9 billion system with 12 hospitals and nearly 100 outpatient clinics. The health system was Health Catalyst’s first customer back in 2008.
