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March 8, 2016

IBM buys Truven for $2.6 Billion, now has Health-Related Data on “approximately 300 million patient lives” with Watson Health

IBM (NYSE: IBM) announced last month that Watson Health will gain the ability to analyze the cost and treatment data on more than 200 million patients with the $2.6 Billion purchase of Truven Health Analytics. This comprised the fourth company IBM has purchased since it created the Watson Health unit in April 2015, bringing the total spent in acquisitions to more than $4 billion. Two other acquisitions, Explorys, a spinoff from the Cleveland Clinic, and Phytel, a maker of software to manage patient care based in Dallas, also brought with them significant data assets, while the $1 billion purchase of Merge Healthcare, a medical-imaging software company, added expertise in managing health image data.

As reported in the NY Times, John E. Kelly III, an IBM senior vice president who oversees research and new initiatives, said the Truven purchase showed “we’re serious, and spending serious money to move fast in a whole new industry for IBM,” health care. The Truven acquisition, Mr. Kelly added, rounds out the range of data assets and data management capabilities in health care that IBM had in mind when it established the Watson Health unit. Explorys and Phytel, he said, brought mostly data from patients’ electronic medical records. The purchase of Merge Healthcare added expertise in managing health image data, which is steadily growing in importance, Mr. Kelly said.

Truven, he said, contributes vital payment information on patients. And payment records include detailed coding on disease types, diagnosis, drugs prescribed and clues to outcomes if, say, a patient does not respond to one treatment and is given another. “It’s a very key cog to give us one of the most complete data sets on patients and health care in the world,” Mr. Kelly said.

IBM is taking a long game approach by creating new businesses focused on harvesting actionable data through Watson’s artificial intelligence algorithms. The clear goal of this broader Watson Health is supporting the US healthcare system, as it shifts from fee-for-service to a value-based healthcare system that both improves outcomes and lowers costs.