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Watson Health Buying Truven in $2.6B Megadeal for Data

Xconomy Boston — 

IBM Watson Health is growing through a major acquisition that consolidates the worlds of clinical data and employer and insurance data. The healthcare-computing division of Big Blue is announcing today its plan to acquire Truven Health Analytics for $2.6 billion.

For now, IBM declined to specify the financial structure of the deal. A spokeswoman said that upon closing, more than 2,600 Truven employees will join Watson Health. That will effectively double the size of Watson Health’s staff to 5,000-plus people. Truven Health Analytics is based in Ann Arbor, MI, with offices in Chicago, Denver, and other cities (including Cambridge, MA).

Watson Health, which is moving its headquarters from New York City to Cambridge, has been on an acquisition tear. In the past year, it has bought Phytel in population health, Explorys in healthcare intelligence, and Merge Healthcare in medical imaging. With the new deal, Watson Health says it will have spent $4 billion to build its “cognitive healthcare capabilities.” Watson Health is headed up by general manager Deborah DiSanzo (pictured), who’s based in the Boston area.

In an e-mail, DiSanzo says: “Watson Health is intent on putting forth a game-changing set of cloud-based, cognitive health offerings that will help inform a broad range of decisions. That can realize itself in a number of ways. For individuals, to make informed health decisions based on factors such as cost, quality and outcomes. For doctors, to provide appropriate care at the right time, place and cost for each patient based on his/her unique needs. For providers and payors, to know that value was achieved for care delivered.”

The basic idea with the Truven deal is to merge complementary data sets. Watson Health has a wealth of data on clinical studies and patient engagement, as well as the ability to read and analyze the literature. Truven brings data and analytics on healthcare costs, claims, and outcomes from health plans, employers, and other organizations.

As IBM senior vice president Michael Rhodin told me last summer, “It’s all about the data.” He was talking about Watson’s ability to make sense of information on an unprecedented scale, and apply that knowledge to healthcare.

Truven was formerly the healthcare business unit of Thomson Reuters. Private equity firm Veritas Capital acquired the business in 2012 and renamed it Truven. Its customers include insurance companies, hospitals, government agencies, and employers. It competes with the likes of Optum Labs (UnitedHealth Group) and Verisk Analytics.

Some context around this deal: there are increasing concerns about privacy when it comes to what employers and other organizations may know about employees’ health data—and what they do with that information. Integrating Truven’s datasets into Watson Health will be part of this bigger debate.