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UPMC and Health Catalyst Partner to Lower the Cost of Healthcare

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Wendy Zellner
Vice President

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UPMC, a leading, integrated health care provider and insurer, and Health Catalyst announced today a strategic partnership to combine technologies and front-line personnel in an unprecedented effort to help health systems solve one of their most vexing and urgent problems – how to measure and analyze the true cost of healthcare delivery for each patient.

Unlike other industries, healthcare has struggled to precisely calculate the cost of its activities and services because of the complexity of human illness, and a limited ability to systematically share, store and analyze data. The agreement between UPMC and Health Catalyst, the first of its kind, builds upon an activity-based cost management system developed by UPMC for commercial use and Health Catalyst’s proven Enterprise Data Warehouse (EDW) infrastructure, analytics expertise, and professional services.

"Thanks to our ability to compare outcomes and costs across a patient's entire care experience — and by service line, hospital and physician — UPMC is identifying and adopting best practices that enhance quality while reducing spending, a convergence that is the"Holy Grail" of healthcare," said Robert DeMichiei, Executive Vice President and Chief Financial Officer of UPMC. "This strategic partnership with Health Catalyst will significantly accelerate that effort by leveraging the experience and know-how of both organizations to benefit UPMC's patients and others across the country."

"As a fully integrated network with an expansive health plan, UPMC is a recognized leader in activity-based cost management and we are delighted that it has selected Health Catalyst to refine and deploy its cost management excellence more broadly across the UPMC network, and to commercialize it for the good of healthcare in general," said Dan Burton, CEO of Health Catalyst. "We are grateful to add UPMC as a customer and as a partner. This is a unique opportunity to join forces with one of the nation's most advanced health systems to create a cost-improvement process and infrastructure that we believe will serve as a prototype to guide other health systems in developing their own data-driven cultures of proactive healthcare transformation."

The agreement with UPMC marks Health Catalyst's third deep partnership with a major health system in 2015, following similar agreements with Partners HealthCare and Allina Health.

Under the agreement, Health Catalyst is licensing technology, content and analytics innovations developed by UPMC as part of the health system's effort to advance patient care while lowering costs. Health Catalyst intends to commercialize these innovations to further enhance UPMC's cost management programs, and to benefit other health systems.

Additionally, UPMC will partner with Health Catalyst to further develop the cost-management program and implement the Health Catalyst Late-Binding™ EDW and Analytics platform to enable more seamless retrieval and aggregation of data from multiple information systems at UPMC. The UPMC employees currently working in cost management have become Health Catalyst team members.

Since deploying its cost management tool in 2014 to blend quality data with physician- and patient-specific cost data, UPMC and its physician leadership have been able to drive significant changes in clinician behavior leading to improved care at lower cost. For example, the number of "open" hysterectomies, compared with vaginal or minimally invasive versions of the surgery, has fallen 30 percent across the system, reducing patient complications, lengths of stay, readmissions and costs. In addition, UPMC clinicians are using the cost management tool to assess practice standardization opportunities associated with alternative payment mechanisms, such as the impending Medicare Comprehensive Care for Joint Replacement Program.

UPMC's costing system models relevant clinical, operational and financial information from multiple information systems at UPMC to provide patient-specific cost on a repeatable, monthly basis. Sophisticated computer modeling tools, along with internally developed algorithms, allow UPMC's financial analysts to match supplies, blood products, equipment use, and more than 50 clinical activities — such as time in the operating room, intensive care unit or rehabilitation facility — to specific patients. In the past, because of limitations of existing technology, general formulas were applied to account for costs, sometimes leading to imprecise conclusions about specific treatments, service lines or facilities.

UPMC's agreement with Health Catalyst was led by UPMC Enterprises, the commercialization arm of UPMC, whose mission is to solve complex health care challenges through innovative ideas and technologies, while creating new jobs and companies in western Pennsylvania. By partnering with innovators like Health Catalyst, UPMC Enterprises is focused on creating and commercializing solutions in four key areas: clinical tools that will transform the delivery of care, population health management that will be essential in health care’s move from volume to value, consumer-centric health care, and business services and infrastructure that improve efficiency.