Dive Brief:
- Indian IT firm Tech Mahindra has agreed to acquire U.S.-based health IT consulting firm CJS Solutions Group for $110 million. CJS does business in the U.S. as The HCI Group.
- Tech Mahindra will pay $89.5 million up front for a 84.7% stake in CJS, which provides assistance with implementations of electronic health record systems, and acquire the balance of 15.3% over three years.
- About 7% of Tech Mahindra’s business is in healthcare and life sciences, according to Reuters report, and the purchase of CJS will help to strengthen that focus.
Dive Insight:
Tech Mahindra officials see the deal as a boost to the company’s role in the healthcare space.
When it takes effect in July, uncertainty about how President Donald Trump’s travel and immigration executive order will impact visas could spur more foreign acquisitions of U.S. companies in the months ahead. The administration has said it will temporarily suspend expedited applications for H-1B visas — the type India’s IT industry relies on to send support staff to U.S. clients.
Despite the current uncertainty around healthcare reform, the digitalization of healthcare has continued to attract more companies that specialize in health IT. Tech Mahindra President and CTO Atul Kunwar says digitalization "is one of the five main pillars" of the company's "future growth strategy." It is also a leader in connected technologies and CSJ says the partnership will help them "improve the healthcare industry through a combination of disruption, innovation and cost reduction."
One of the drivers of this trend is the increased demand for data-based insights at the point of decison-making with the healthcare system's shift to value-based care. “Healthcare has been labeled as ‘ripe for disruption’ for years, but the combination of government mandates and regulations, technological advancements and financial incentives of the last decade has seemed to finally get the needle moving,” Derek Spearing, senior manager at Top Tier Consulting told Healthcare Dive.
The Tech Mahindra-CJS deal is expected to close by the end of April.