UPDATED: IBM Watson Health to buy Truven for $2.6B in fourth health data deal

IBM ($IBM) has been on a tear in healthcare since it formed its Watson Health business last April. Now, in its fourth major health data deal it's slated to acquire Ann Arbor, MI-based Truven Health Analytics. The acquisition is expected to help flesh out Watson Health's core focus on cloud-based healthcare data and analytics.

Once this deal closes, Watson Health will have spent more than $4 billion in total for this and its other purchases including population health player Phytel, cloud-based healthcare intelligence company Explorys and medical image management company Merge Healthcare for a whopping $1 billion. As a result of those three prior deals, Watson Health now reaches into an estimated 300 million patient lives.

Deborah DiSanzo, Watson Health General Manager

"With this acquisition, IBM will be the world's leading health data, analytics and insights company, and the only one that can deliver the unique cognitive capabilities of the Watson platform," said Watson Health General Manager Deborah DiSanzo in a statement. Of Truven, she added it will "complement Watson Health's broad-based team, capabilities and offerings. 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."

Watson Health said the deal will double its number of employees to more than 5,000. Truven brings to the table more than 8,500 clients from across the life sciences, providers, payers and government agencies. Truven already has an incredible reach: even before integration with IBM, its analytics underlie benefit decisions for one out of three Americans.

That could prove beneficial to Watson Health's already star-studded line-up of prominent partners that includes Medtronic ($MDT), Johnson & Johnson ($JNJ) and Apple ($AAPL). In addition to J&J, it's also working with major biopharmas including Novo Nordisk ($NVO) and Teva Pharmaceutical ($TEVA).

The ultimate goal is to create a massive machine learning-driven entity to improve outcomes, control costs and improve upon value-based healthcare.

Established more than 40 years ago, Truven offers analytics-based guidance aimed at improving quality, enhancing efficiency and reducing costs for almost every conceivable sort of healthcare or life sciences stakeholder. For healthcare providers, it offers population health management; for payers, analytics on their member health, costs and provider relationships; and for governmental agencies, insights designed to streamline healthcare offerings and improve their performance.

For its part, Watson Health plans to integrate Truven's cloud-based data sets with its own existing ones, thereby aggregating what it says are "hundreds of different types of cost, claims, quality and outcomes information."

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 U.S., where its primary proponent is The Centers for Medicare and Medicaid Services (CMS).

"Healthcare has been fragmented but the data can bring it all together," IBM Watson Chief Health Officer Dr. Kyu Rhee told FierceMedicalDevices in an interview. "All of these stakeholders have a common goal, patient health. We also need a common goal of value-based care. … The journey is far from complete, we're still at the early stages of it. A lot of this data hasn't been in the right format, with a system like Watson to make sense out of it and there has not been a player like IBM to be a trust broker to deliver all of those insights."

The vision for Watson Health is that its sophisticated data analytics will serve as the basis for making the lofty aspirations of value-based healthcare more of a concrete reality, getting rid of a traditional fee-for-service model in favor of payment tied to improved outcomes and lower costs.

Truven President and CEO Mike Boswood said in a statement of the deal, "This will help catapult the industry forward to transform healthcare and to save and improve lives." The acquisition is slated to close later this year.

- here's the release

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