IBM to buy data company Truven Health Analytics for $2.6 billion

Using IBM’s Watson Health Cloud, health-care organizations will be able to combine several data sets.

Today, the company announced that it has agreed to purchase Truven Health Analytics for a staggering $2.6 billion, effectively doubling the size of its new Watson Health business unit.

Once the deal is finalized, IBM’s health cloud will have a portfolio of health-related data for approximately 300 million patients acquired from three different companies. “Together, we’re well positioned to scale globally and to build first-in-class offerings created to help our clients apply cognitive insights in a value-based care environment”.

Founded over 40 years ago, Truven Health Analytics owns healthcare such as MarketScan, 100 Top Hospitals, Advantage Suite, Micromedex, Simpler, ActionOI and JWA. While the consensus outlook calls for IBM’s free cash flow to drop 5% in each of the next two years, Huberty expects the company’s free cash flow to rise 2% over the same period.

IBM has championed Watson Health as a tool to bring high-quality health-care to remote areas, to match patients to clinical trials, and to give health researchers access to massive data sets. Truven tracks cost, claims and quality data in health care. Data and insights from Truven inform benefit decisions for 1 in 3 Americans.

IBM’s investments in acquisitions and development of unparalleled array of cognitive healthcare capabilities will be more than $4 billion following the closing of the transaction.

“Health-care data is incredibly valuable right now”, said Michael Chernew, an economist at Harvard Medical School who studies health policy and has used Truven data in his research. It has also partnered with Apple, Medtronic, Johnson & Johnson, Teva Pharmaceuticals, Novo Nordisk, and CVS Health. That way, healthcare providers are paid to keep people healthy and help improve the condition of people living with chronic conditions like diabetes in an evidence-based way.

IBM has thrown the force of Watson Health behind the ever-elusive concept of value-based healthcare-a notion that has been around for years but has thus far offered few results in improving care or lowering costs in the US, where its primary proponent is The Centers for Medicare and Medicaid Services (CMS).