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Mergers, Acquisitions, And Partnerships
Dramatically Reducing IT Consolidation Expenses
With a Data Operating System
Dale ...
• I work for Health Catalyst and the technology we produce is related
to the concepts that I advocate in this lecture
• Th...
• Digitizing healthcare… EHRs we’re just beginning
• Mergers, Acquisitions, and Partnerships and IT
strategy
• What’s a Da...
1. For better or worse, faster or slower, your company runs at the
speed of software now
2. Everything you want and need t...
• The world’s largest taxi company… owns no taxis
• The world’s largest voice/video communications companies… own no telco...
The world’s largest and most successful healthcare and
health management companies,
will own no hospitals
In the Digital F...
The Parallels Between Health and Car Maintenance
An ounce of prevention is worth a pound of cure
• Every 10 hours, Tesla c...
80% of Factors Affecting Health Outcomes Fall Outside Traditional Healthcare Delivery
The Breadth of the Human Health Data Ecosystem
What data do we need for research, personalized care, and community health?...
Humans Gravitate Towards Freedom of Choice
6 billion smart phones by 2020 in a world population of 8 billion
10
Evolution of Healthcare IT
In The Meantime, This Is What’s Possible…
• 103 applications on my iPhone
• 89 different vendors
• They build on a common ...
Mergers, Acquisitions, &
Partnerships
And the IT strategies that help or hurt
• It’s not over…
• 11 straight quarters of more than 200 M&As in healthcare,
totaling $49.6B
• PwC
• “Top performers acros...
• Your new company is not integrated until your data is integrated
• HIE’s are not sufficient for data integration… not ev...
IT Integration vs. The Technology Stack
Computing Infrastructure, e.g., severs, networks, data centers, storage
Databases ...
• Economies of scale… more efficient through consolidation of
shared services and other infrastructure
• Combining scarce ...
• There generally isn’t one, other than the hope of administrative
savings through IT consolidation
• The strategic value ...
IT Strategies that Drive M&A Success
• The acquirer gets its own IT house in-order, first
• Many develop a “Services Orien...
• The prevailing solution: Rip and replace
• You’ll be finished in 3-4 years, if you’re lucky, and be 74% over-schedule,
5...
Costs to Rip & Replace... Just for EHRs
These are my personally calculated numbers, based on first-hand
experience…
• $13K...
“Will you ever consolidate to a single EHR?”
“Oh no, I can’t imagine. We’ve looked at it a few times, but the total
costs ...
• The demand for EHRs
was stretched by
federal incentives.
That’s over.
• The underlying
software and
database technology
...
So, What’s a Data
Operating System?
Back to the Technology Stack
25
Cloud Computing, e.g.
Amazon, Microsoft, Google
Databases and Operating Systems, e.g.
Orac...
• Sitting on top of a cloud-based, lake of data
• All of the healthcare and health-related data in your
organization; publ...
Using Related Concepts…
DOS is a combination of the following,
but enabled by modern technology,
designs, and software…
1....
DOS is a Hybrid Architecture
Gartner: Hybrid Transactional/Analytical Processing (HTAP)
“Because traditional data warehous...
1. Reusable clinical and business logic: Registries, value sets, and other data logic lies on top of the raw data and
can ...
DOS Can Bridge the Data and Applications
Health Catalyst Applications
Client-Built
Applications
Registry
Builder
Leading
W...
Data Operating Systems, and their recent
predecessors, Enterprise Data Warehouses, cost a
fraction of ripping and replacin...
Between 2001 and 2009, they implemented similar concepts to DOS as well
as a “DevOps” culture in software development.
The...
• The digital future of healthcare is about data that
persists for a patient’s lifetime, but applications that
last for mo...
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Mergers, acquisitions, and partnerships dramatically reducing it consolidation expenses with a data operating system

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Please join Dale Sanders, President of Health Catalyst Technology, in this webinar as he explains his experiences, observations, and advice about the use of an EDW or DOS to reduce the costs of IT integration in healthcare M&A and rapidly increase the value proposition of the new organization. Dale has a diverse background in complex data environments and decision support, spanning three decades in the US Air Force, National Security Agency, and as a CIO in healthcare.

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Mergers, acquisitions, and partnerships dramatically reducing it consolidation expenses with a data operating system

  1. 1. Mergers, Acquisitions, And Partnerships Dramatically Reducing IT Consolidation Expenses With a Data Operating System Dale Sanders September 2017 Thanks, Rus Tabet, for graphic
  2. 2. • I work for Health Catalyst and the technology we produce is related to the concepts that I advocate in this lecture • The technology strategies and concepts advocated herein, I would also follow myself, if I were still an operational healthcare CIO Disclosure One of our Four Operating Principles
  3. 3. • Digitizing healthcare… EHRs we’re just beginning • Mergers, Acquisitions, and Partnerships and IT strategy • What’s a Data Operating System and what role does it play in M&A? Today’s Story
  4. 4. 1. For better or worse, faster or slower, your company runs at the speed of software now 2. Everything you want and need to do is either helped or hindered by software and data 3. All C-levels now need to be a little bit Chief Information Officer and Chief Digital Officer Advice to C-levels About a Digital Health Future Thank you, Russel Reynolds Associates for the graphic
  5. 5. • The world’s largest taxi company… owns no taxis • The world’s largest voice/video communications companies… own no telco • The most popular media company… owns no content • The largest lodging company… owns no property • The world’s most valuable retailer… owns no inventory • The world’s largest software vendors… don’t write the apps Digital Disruption is Already Happening Thanks for the inspiration, Ron Kalifa of Worldpay; and IBM
  6. 6. The world’s largest and most successful healthcare and health management companies, will own no hospitals In the Digital Future of Healthcare…
  7. 7. The Parallels Between Health and Car Maintenance An ounce of prevention is worth a pound of cure • Every 10 hours, Tesla collects 1 million miles of driving data • 25Gbytes per car per hour • We collect 100Mbytes per patient per year, on average • “We can fix problems in your car and make it safer, long before you know you need it.” • ”10,000 fatalities and 500,000 injuries per year will be prevented.” • Ram Ramachander, Chief Commercial Officer, Social Innovation Business at Hitachi
  8. 8. 80% of Factors Affecting Health Outcomes Fall Outside Traditional Healthcare Delivery
  9. 9. The Breadth of the Human Health Data Ecosystem What data do we need for research, personalized care, and community health? And, by the way, we have barely any data on healthy patients
  10. 10. Humans Gravitate Towards Freedom of Choice 6 billion smart phones by 2020 in a world population of 8 billion 10
  11. 11. Evolution of Healthcare IT
  12. 12. In The Meantime, This Is What’s Possible… • 103 applications on my iPhone • 89 different vendors • They build on a common platform with open software standards • I wouldn’t expect nor hope for a single vendor to meet all my needs
  13. 13. Mergers, Acquisitions, & Partnerships And the IT strategies that help or hurt
  14. 14. • It’s not over… • 11 straight quarters of more than 200 M&As in healthcare, totaling $49.6B • PwC • “Top performers across all industries focus first on data integration and have a plan to do so within six months post- merger.” • “40% of M&A value in healthcare is directly tied to IT strategy.” • McKinsey Mergers, Acquisitions, Partnerships 14
  15. 15. • Your new company is not integrated until your data is integrated • HIE’s are not sufficient for data integration… not even close • Ripping and replacing EMRs and ERP systems with a single, common vendor is not an affordable or timely strategy • M&A strategy in the digital world is more about data acquisition than bricks & mortar acquisition– but that’s not happening in healthcare Sanders’ Assertions
  16. 16. IT Integration vs. The Technology Stack Computing Infrastructure, e.g., severs, networks, data centers, storage Databases and Operating Systems, e.g. Oracle, SQL, MySQL, Hadoop, Spark, iOS, Android, Linux, Windows Data Content Software Applications, e.g. EHR, HR, Finance, Email, Web, etc. The data content layer is the only layer in the stack that can be “peeled” away without impacting the other layers There is a tendency to start here in healthcare
  17. 17. • Economies of scale… more efficient through consolidation of shared services and other infrastructure • Combining scarce resources • Move into complementary markets, by geography or product • Reduce risk through larger populations and revenue • Improve an underperforming organization or asset and thus increase revenue Common Motives Behind M&As in Healthcare 17
  18. 18. • There generally isn’t one, other than the hope of administrative savings through IT consolidation • The strategic value of data acquisition is still largely ignored What’s the IT Strategy in Healthcare M&A? 18
  19. 19. IT Strategies that Drive M&A Success • The acquirer gets its own IT house in-order, first • Many develop a “Services Oriented Architecture” anticipating the need to be flexible and adaptable • IT leaders are heavily involved in the due diligence prior to acquisition • Forecasts of revenue growth and cost synergies are driven by financial rules of thumb, ignoring the challenges of integrating the business and clinical functions that IT enables • Carefully plan post-merger integration, during due diligence, and factor those into the overall acquisition costs • A data integration plan within 6 months post-merger • Not a systems or application integration plan 10-15% cost savings from a successful IT integration strategy 19
  20. 20. • The prevailing solution: Rip and replace • You’ll be finished in 3-4 years, if you’re lucky, and be 74% over-schedule, 59% over-budget, and deliver 56% less value than predicted* • In the meantime… ERP, EHR, and Other Systems Consolidation *McKinsey, 2012; Standish, 2013
  21. 21. Costs to Rip & Replace... Just for EHRs These are my personally calculated numbers, based on first-hand experience… • $13K, minimum, per employee • $41K, minimum, per physician • Hundreds of millions of $$ is common That’s one of dozens of application software systems in today’s healthcare systems 21
  22. 22. “Will you ever consolidate to a single EHR?” “Oh no, I can’t imagine. We’ve looked at it a few times, but the total costs are in the billions, and for what? Minor incremental value? We’re using our data warehouse and building a software services layer to tie them together until there are better options.” --C-level at the largest for-profit health system in the U.S. 22
  23. 23. • The demand for EHRs was stretched by federal incentives. That’s over. • The underlying software and database technology of EHRs was commoditized a long time ago. • We can stretch the lifecycle and value of EHRs with DOS and open APIs, e.g. FHIR. You Can Extend the Life of Existing EHRs With a Good Data Strategy
  24. 24. So, What’s a Data Operating System?
  25. 25. Back to the Technology Stack 25 Cloud Computing, e.g. Amazon, Microsoft, Google Databases and Operating Systems, e.g. Oracle, SQL, MySQL, Hadoop, Spark, iOS, Android, Linux, Windows Domain-Specific Data Content, e.g. Health and Healthcare Software Development Environments, e.g., Git, Eclipse, Angular, D3, Mono, Node, Python, R Amazing capability Amazing capability This is the layer of the Data Operating System Amazing capability
  26. 26. • Sitting on top of a cloud-based, lake of data • All of the healthcare and health-related data in your organization; publicly available health data; and the data of your health system partners • >100 different, disparate sources of data, integrated and bound together in logical groupings • 100 terabytes of data, and more • Organized and optimized for software developers to leverage that data content so they don’t have to reinvent the wheel • And the applications they write are contributing data back to the DOS, enhancing its data content • Dozens or hundreds of applications of your choice, meeting your specific needs Imagine Your Smart Phone…
  27. 27. Using Related Concepts… DOS is a combination of the following, but enabled by modern technology, designs, and software… 1. HIE 2. Clinical Data Repository 3. Enterprise Data Warehouse DOS is a platform of constantly updated raw and organized data, from multiple transaction systems, within a domain such as healthcare, that enables rapid development and changes to the software applications built upon it. 27
  28. 28. DOS is a Hybrid Architecture Gartner: Hybrid Transactional/Analytical Processing (HTAP) “Because traditional data warehouse practices will be outdated by the end of 2018, data warehouse solution architects must evolve toward a broader data management solution for analytics.” 29
  29. 29. 1. Reusable clinical and business logic: Registries, value sets, and other data logic lies on top of the raw data and can be accessed, reused, and updated through open APIs, enabling 3rd party application development. 2. Streaming data: Near or real-time data streaming from the source all the way to the expression of that data through the DOS, that can support transaction-level exchange of data or analytic processing. 3. Integrates structured and unstructured data: Integrates text and structured data in the same environment. Eventually, incorporates images, too. 4. Closed loop capability: The methods for expressing the knowledge in the DOS include the ability to deliver that knowledge at the point of decision making, including back into the workflow of source systems, such as an EHR. 5. Microservices architecture: In addition to abstracted data logic, open microservices APIs exist for DOS operations such as authorization, identity management, data pipeline management, and DevOps telemetry. These microservices also enable third party applications to be built on the DOS. 6. Machine Learning: The DOS natively runs machine learning models and enables rapid development and utilization of ML models, embedded in all applications. 7. Agnostic data lake: Some or all of the DOS can be deployed over the top of any healthcare data lake. The reusable forms of logic must support different computation engines; e.g. SQL, Spark SQL, SQL on Hadoop, et al. Seven Attributes of a Data Operating System
  30. 30. DOS Can Bridge the Data and Applications Health Catalyst Applications Client-Built Applications Registry Builder Leading Wisely Care Management CAFÉ Benchmarks ACO Financials Choosing Wisely Patient Safety Measure Library Patient Engagement Catalyst Analytics Platform Data Ingest Data ExportData Pipelines Source Connectors Hadoop/ Spark Data Lake Fabric Real-Time Services Real-Time Processing HL7 Real-Time Streaming Machine Learning Pipelines Marketplace Atlas and more …SAMD & SMD Fabric Application Services Registries Terminology & Groupers FHIREHR Integration Security, Identity & Compliance Patient & Provider Matching Measures Fabric Data Services Data Governance Pattern Recognition NLP Data QualityMetadata Standard Data Models ML Models 3rd Party Apps Reusable Content
  31. 31. Data Operating Systems, and their recent predecessors, Enterprise Data Warehouses, cost a fraction of ripping and replacing EHRs, ERPs, and other applications • ~$3M-$5M to install and deploy in a few months • ~$2M-$3M per year to operate and evolve • ~$340 per employee vs. $13,000 per employee for an EHR What About the Costs? 31
  32. 32. Between 2001 and 2009, they implemented similar concepts to DOS as well as a “DevOps” culture in software development. The results in their software were dramatic… Related Impact at Amazon
  33. 33. • The digital future of healthcare is about data that persists for a patient’s lifetime, but applications that last for months or, at most, a few years • It’s about choice, adaptability, and personal software preferences • The wrong IT strategy will haunt M&A value for decades • Rip & Replace: Incremental value for massive investment • Focus on integrating data, not applications, through a DOS or Enterprise Data Warehouse The Moral to This Story…

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