IBM, Accenture Buy Health-Care Practices

IBM announced Tuesday that it will buy Healthlink, the largest U.S. consulting firm dedicated to the health-care industry. The acquisition gives IBM Global Services the domain expertise of Healthlink's 550-person professional organization, including 300 physicians, nurses and pharmacists. Terms of the deal were not disclosed.

The acquisition is the second in one week in which a large IT consulting company acquired the health-care expertise of another. Last week, Accenture paid $175 million to buy the U.S. health-care practice of Capgemini. The 600 North American employees of Europe's largest consulting company will join Accenture's Health and Life Sciences practice in North America, the companies said. Paris-based Capgemini will retain its outsourcing contracts with U.S. health-care clients as well as continue health-care consulting in the federal public sector.

After a flood regulations regarding privacy, HIPAA-compliance and patient rights, the health-care market is finally beginning to modernize its patient record-keeping systems. As with other sectors of the IT industry--notably the business applications market--the quest for vertical expertise is driving consolidation in the consulting world.

"I've been seeing other acquisitions, too, by companies looking to get into a specific domain by acquiring a small company that has that expertise," said Woo Song, chairman of regional systems integrator Intrasphere, New York. "The domain orientation has become a dominant factor driving these acquisitions," Song said. "These are tough times to be a small company right now. Those larger companies keep buying that domain expertise customers typically turn to the smaller ones to provide."