A Big Deal for Big Data: IBM to Acquire Truven for $2.6 Billion

By Stephanie Murg, Managing Director, G2 Intelligence

Less than a year after launching its Watson Health unit, IBM (Armonk, N.Y.) has announced a fourth major health data-related acquisition: a $2.6 billion deal to acquire Truven Health Analytics (Ann Arbor, Mich.) from private-equity firm Veritas Capital (New York, N.Y.). Truven is a provider of health care data and analytics that would bring some 8,500 new clients—including U.S. federal and state government agencies, employers, health plans, hospitals, clinicians, and life sciences companies—to IBM’s health cloud. The deal is expected to close later this year.

“With this acquisition, IBM will be one of the world’s leading health data, analytics, and insights companies, and the only one that can deliver the unique cognitive capabilities of the Watson platform,” said Deborah DiSanzo, general manager for IBM Watson Health, in a February 18 statement announcing the deal. “Together, we’re well-positioned to scale globally and to build first-in-class offerings designed to help our clients apply cognitive insights in a value-based care environment.”

The slow but steady shift of health care away from the traditional fee-for-service model and toward outcomes-based payments makes data a vital commodity. A broad range of organizations are now grappling with the challenges of mining data, developing quality measures, and applying predictive algorithms in a world where “cost-effectiveness” is king.

Formed in April 2015 following IBM’s acquisition of health care technology companies Explorys (cloud-based health care intelligence) and Phytel (population health), the Watson Health Cloud is an extension of the company’s exclusive Watson cognitive computing platform. The dedicated business unit, bolstered in August 2015 by the $1 billion purchase of medical imaging company Merge Healthcare, is designed to allow organizations to take previously disparate data sets, including vast amounts of unstructured data, and combine them to create insights that help inform health decisions.

Truven began its life as a unit of Thomson Reuters Corp. Veritas paid $1.25 billion for the business in June 2012 and renamed it. Among the company’s products are those that help hospitals to benchmark performance and those that help health plans and employers manage patient populations such as diabetics. IBM plans to integrate Truven’s extensive cloud-based data set—spanning hundreds of types of cost, claims, quality, and outcomes information—with its existing data sets.