Big Data company Palantir looks at expansion into Canada’s health care sector

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When Kathleen McMahon stepped on to a virtual stage in mid-April before an audience of executives from Canadian hospitals, government agencies and drug companies, she figured she had a compelling pitch.

The co-head of the life sciences team at Denver-based tech company Palantir Technologies Inc. was demonstrating software that aims to make the health care system far more efficient, by quickly and confidentially sharing data. Earlier in April, Ms. McMahon had let a reporter sit in on a dress rehearsal for her pitch and when asked an obvious question – are you confident your system will work in the presentation? – she’d smiled.

The Palantir product she was planning to introduce to Canadians, called Foundry, had already proved its merits on British pandemic projects that involved 60 hospitals, more than 1.2 million patients and more than 1,000 researchers, she said. “We supported the COVID research platform at the NHS,” said Ms. McMahon, referring to the British government-run National Health Service.

So as she talked up her company’s software at the virtual event, she and her fellow executives felt confident the Canadian market would pay attention.

For David MacNaughton, president of Palantir’s Canadian operations, getting smarter about using data is part of the solution to postpandemic health care problems that experts can see coming. In the short term, technology can help deal with the country’s massive and still-growing backlog of surgeries and diagnostic procedures. Longer term, operating more efficiently can control soaring costs.

“Coming out of COVID, we need systemwide solutions for health care,” said Mr. MacNaughton, Canada’s former ambassador to the United States and a veteran public affairs executive. “The pressure on health care workers and politicians is unbelievable. Without the right data, they can’t make the right decisions.”

Across Canada, doctors and hospitals face a logistical nightmare as they try to reschedule everything from knee replacements to cancer screenings. In early May, the Financial Accountability Office of Ontario said it will take more than three years to clear the province’s pandemic-inspired backlog. The FAO noted this estimate likely understates the problem, as its review failed to include data on hospital staffing, operating room availability and other logistic constraints.

During lockdowns, Ontario doctors postponed more than 11,000 surgical procedures and 52,000 tests each week. Mr. MacNaughton said Palantir’s software helps deal with this backlog with programs that proved their worth in other jurisdictions. For example, the company’s programs can optimize the use of operating rooms and testing facilities across regions that currently cannot share information.

Innovation can also help a national health care system facing a financial crisis. In Ontario alone, the FAO said it will cost more than $1.3-billion to eliminate the backlog in surgery and testing. In its 2021 budget, Ontario’s Conservative government allocated just $610-million to fixing the problem.

Funding shortfalls arising out of the pandemic are symptomatic of a larger gap between what voters expect from their health care system and what governments can afford. Again, in Ontario, the FAO said over the next nine years, the province faces a $62-billion health care funding shortfall and “if the province intends to meet its health sector spending targets, then new spending restraint measures will need to be introduced.”

Health care accounts for half of government spending in most provinces, and Mr. MacNaughton said improving the system is a priority for politicians across the country. “We have a single-payer health care system, yet most parts of that system operate in their own silos, and that contributed to flaws in our COVID response,” he said. “We’re comparing apples to bananas to pomegranates, when we need reliable data to make decisions.”

Palantir’s roots are in software that helps U.S. intelligence agencies make better use of shared data. Founded in 2003, after the 9/11 attacks, the company’s early backers included the Central Intelligence Agency. Military and intelligence services remain significant clients, and Mr. MacNaughton said Palantir sees opportunities to win work from Canada’s armed forces, police and intelligence agencies as they attempt to better co-ordinate their work.

Being a dominant player in Big Data brings concerns about George Orwell’s “Big Brother.” Mr. MacNaughton said client confidentiality and high standards on data governance are key concerns at Palantir. “Look at our history, and you’ll see that we are trusted by agencies that put a premium on confidentiality,” Mr. MacNaughton said. He said unlike many tech rivals, “we don’t sell data and we don’t use it for our own purposes.”

In Palantir’s session for potential Canadian health care clients, Ms. McMahon frequently mentioned that the company and its customers scrub all of a patient’s personal information from medical data before it used in studies, research or policy-making.

Think of Palantir’s products as the software equivalent of Star Trek’s “universal translator,” a device that allows aliens to talk to one another. Products such as Foundry take data from multiple suppliers, using multiple software programs, and make it compatible, and easy to work with. Data crunching projects that used to take weeks or months play out in minutes.

Palantir has more than 130 major clients, with the average client paying the company about US$5-million a year for its services. Analyst Matthew Hedberg at RBC Capital Markets said, to date, the company has only built relationships with about 1 per cent of its potential customers. Palantir’s revenue, currently US$1-billion annually, are expected to rise at a 30-per-cent annual clip. In a report, Mr. Hedberg said: “The size of Palantir’s customer engagements suggest the company is solving highly valuable problems with an increasingly sticky solution.”

Palantir listed its shares on the New York Stock Exchange last September, and began trading at US$10 each. The stock price doubled in the past seven months, closing Friday at US$20.75, which values the company at US$39-billion.

Palantir hit a speed bump in Canada last year when federal NDP politician Charlie Angus alleged Mr. MacNaughton breached rules that restrict former officials from lobbying politicians for five years after leaving public office when he counselled government offices during the pandemic.

In March, federal lobbying commissioner Nancy Bélanger cleared Palantir and its Canadian leader. She said Mr. MacNaughton did not contravene federal rules by engaging with government officials. Ms. Bélanger also said officials in her department gave the former ambassador written approval in September, 2019, for potential Palantir pitches to federal government departments.

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