In case you missed the news, Health Catalyst recently announced that they’re lifting client restrictions on solicitation and hiring Health Catalyst employees in their contracts. This comes after Health Catalyst had previously said it would not enforce the non-compete provisions on previous and future employee contracts. From the press release they say why they made the change:
“We are committed to working with our clients as long-term partners, and focusing on long-term customer success is our first operating principle,” said Dan Burton, CEO of Health Catalyst. “Our contractual restriction to prevent clients from soliciting or hiring our team members puts up a wall between us and our clients that could inhibit our work together. We want to eliminate any barriers that might prevent our clients from achieving and sustaining clinical and financial outcomes improvements.”
Although, they also added this employee and healthcare industry focused perspective as well:
“Our company’s purpose is to enable outcomes improvement at scale,” Burton continued. “If in some instances that purpose can be furthered by our clients hiring one of our team members, and this is of interest to our team members then we don’t want to prevent that. In fact, we view it as a sincere compliment when our clients value our team members’ contributions so highly that they express interest in hiring our team members. Ultimately, we hope each of our team members remains committed to enabling outcomes improvements at scale, whether as a team member or as an alumni of Health Catalyst. We seek to enable our team members’ long-term career success whether inside or outside the company.”
While the press release touts this as a noble effort, I think it’s going to be a great business move as well. Doing what’s best for your clients and your employees usually is a great long term business move. This is particularly true in the small healthcare IT world where everyone seems to rotate companies.
The move by Health Catalyst is unique in healthcare. Particularly in the EHR industry where certain companies have been brutal in holding their former employees hostage. It’s pretty epic the lengths they go to screw over their former employees in their contracts. I get that these EHR vendors are trying to retain employees and get a return on the investment they make training a new employee on their EHR. Having their customer hire a former employee could also cause a hit to their revenue. However, I think the non-compete and non-solicitation pieces of these contracts are a short sited policy that will have long term consequences.
I’m reminded of this quote from Sir Richard Branson which says, “Train people well enough so they can leave, treat them well enough so they don’t want to.” Health Catalyst is now going to have to focus on the 2nd part of that quote. Maybe some EHR vendors are rightly afraid of the 2nd part of this quote. If that’s the case, maybe a contractual obligation is the right strategy.