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Thank you for taking the time to share this detailed review describing your experience during your first 1-2 years at Health Catalyst. I have read and reread your comments, while also allowing some time to pass before responding, to try to ensure that I was open to receiving this constructive feedback and then working to improve based on the feedback.
Let me offer some thoughts in response to each category of feedback that you've shared, starting with the positives of your experience thus far at Health Catalyst. I'm encouraged to hear that you have realized positive work/life balance, which is not always the case, particularly for team members who are in their first 1-2 years at the company. I'm encouraged to hear that this has been a positive aspect of your experience at Health Catalyst.
Second, I'm glad to hear that you've found the benefits, including those available to remote team members, to be positive. Many of those benefits were added, over time, based on feedback that leadership received, through skip-level 1:1s (each year I have a goal to conduct 200 skip-level 1:1s with team members), through Glassdoor review feedback, through the semi-annual Gallup engagement survey feedback (we as a leadership team review every comment submitted every six months, and then take action based on this feedback, every six months, and have done so for many years), through "ask leadership anything" questions and comments, and through other channels like our all-team-member meetings held every two weeks. Over the past eight years we've made over 100 company policy changes as a result of team member feedback through these channels. I'm also glad to hear you feel connected to friendly coworkers and to the mission of the company.
Now let's turn to the list of 'cons' that you shared, based on your experience thus far at Health Catalyst. First, you share that you observe a large variance between the company mission and the reality on the ground with clients. This is very concerning to me, and I would welcome the chance to better understand this, if you'd be willing to meet 1:1 with me to help me better understand what you're experiencing. I believe strongly in many of the principles that you espouse about how to consistently execute against a mission across clients and across organizational boundaries, and our companywide bonus plan is designed to reinforce this shared commitment to three consistent strategic objectives. There is significant performance-related evidence that our clients are realizing accelerated measurable improvements, based on the number of client-approved improvements occurring each quarter, tied to our first bonus objective. So I'd welcome the chance to visit 1:1 with you about the disconnects you're seeing so that we can address those disconnects and work to improve.
Second, you share feedback that we are conservative in our use of cutting-edge technology. I appreciate this perspective, and this balance between not abandoning what has worked in the past, while also working to leverage and adopt the benefits of modern technology innovations, is something we discuss and debate as a leadership team, at length, throughout the year, and in earnest, as part of each annual planning cycle. Our ~$40M annual investment in R&D is designed to enable us to invest across that spectrum, but admittedly we apply judgment in allocating that investment. We welcome team members to be courageously transparent in speaking up to ensure we fully understand what you're observing and have the benefit of that information as we make investment allocation decisions, and now is an opportune time to do so, as we are in the midst of 2020 planning. Please share your perspective and feedback with technology and professional services leadership, and we will be more data-informed as as result.
Third, you shared feedback about the reality of being a publicly traded company. This is something we as a leadership team have considered, carefully, and at length, for many years. Our considerations were informed by the direct experience of members of our leadership team who had spent portions of their career within publicly traded technology companies. For example, I'm grateful to have brought over a decade of personal experience at publicly traded technology companies, including a few years where I participated directly in the quarterly process of preparing for and participating in earnings releases and related activities, prior to joining Health Catalyst nearly nine years ago. This experience, coupled with dozens of conversations as a board, all informed our perspective of when we felt we would be sufficiently prepared to become a successful public company. This process included identifying size, scale and predictability thresholds for our business to achieve prior to considering an IPO. It also included many quarters of "practice" prior to becoming a public company. Much of this preparation and consideration occurred in the months and years before you joined Health Catalyst, so you would not have likely had visibility to this preparatory work. Given this work, and after a great deal of careful consideration as a board and as a leadership team, we felt prepared to move forward and become a publicly traded company. Now, several months post-IPO, with the benefit of some hindsight, I see the benefits accruing to the company because of these years of preparations. And one of the benefits I feel most positively about is the direct benefit to every team member of the equity they have received and will receive being both liquid and valuable. Because for many, many years we have made every team member an owner in the company, very soon, each team member will have the ability to leverage that ownership in meaningful ways, which feels very positive.
Fourth, you shared feedback about the geographic salary differential. As you noted, this is something we have discussed multiple times, and it is on our prioritized list of benefits we hope to have "earned the right" to add as part of the 2020 planning process. To the third topic above, concerning the realities of being a publicly traded company, we are expected to achieve financial sustainability as a company, which then requires us to "earn the right" to add benefits to team members, which we work hard to do each year. And each year for many, many years, we have added benefits (as I referenced previously) as soon as we could do so within a financial sustainability framework. I am hopeful that the geographic differential will be added as part of 2020 planning.
Fifth, you suggested a perverse incentive in including team member satisfaction in the bonus calculation for all team members, and that a better approach would be to only have managers/leaders' bonuses tied to this metric. That is in fact exactly what we do at Health Catalyst (and that has been our bonus approach for many years). Only people managers' bonus is impacted by the team member satisfaction number, and that happens only in a negative way for those people managers -- their bonus is calculated as the LOWER of the team member satisfaction and the customer satisfaction results, as one of the "burdens" of leadership. There is no perverse incentive here. This is noted in every bonus slide, and we try to highlight this each time we discuss the team member bonus, but hopefully this clears up any confusion on this topic.
Now let me turn to the advice that you offered in the "Advice to Management" category. First, regarding your advice to hire an outside firm to provide an objective view of our management operations, I agree that this can be very helpful. Over the past eight years we have, on multiple occasions, brought in outside parties to help us understand our performance, to great benefit. In fact, we currently have an outside consultant reviewing our operational performance across multiple business and functional areas, including sales, marketing, communications, technology and professional services. I agree with you that this can be very helpful and healthy to do.
Also, we are consistently adding new talent and perspectives from outside the company, including at leadership levels, and we'll announce a few new leadership team positions we will be posting both internally and externally as part of our 2020 planning process, during tomorrow's all-team-member meeting. And I agree that we need a mix of experience in order to continue to grow and scale, including team members who have public company experience. I still see great value in team members who also have direct healthcare delivery experience as well.
Let me conclude by thanking you for choosing to recently join Health Catalyst, and for sharing your perspective and feedback. I hope that the information I have shared in response will provide some helpful additional context, which might be of use to you, and I hope that your experience at Health Catalyst becomes better and better over time. This is certainly my hope and goal for every team member at Health Catalyst. And, let me reiterate that if you would be open to visiting 1:1 with me regarding disconnects you see in our commitment to the mission, I would appreciate better understanding this topic so we can work to improve. Thank you again! Best, Dan
