GE is acquiring API Healthcare to improve efficiency & transparency in hospitals

General Electric just announced it has acquired API Healthcare, a company that sells software to hospitals to improve productivity.

The strategic buy-up is in line with GE’s overall strategy to bolster efficiency in hospitals. In June of 2013, the industrial giant announced it would set aside $2 billion for its burgeoning health care practice.

Financial terms of the deal have not been disclosed.

In April of 2011, API Healthcare walked away from a pending sale to Kronos, its largest competitor, in order to remain a private company. Both Kronos and API Healthcare provide workforce management and patient tracking software to hospitals and smaller health clinics.

With the rollout of the Affordable Care Act, now is the optimal time for an exit. The ACA is pushing hospitals to deliver value-based rather than volume-based care. What this means is that doctors will be incentivized to keep patients healthy rather than charge for a battery of expensive procedures and tests.

And GE isn’t the only firm that expects to cash in as doctors go digital. Cloud companies like Box recently delved into health care and are building software that is sufficiently secure and compliant. Likewise, venture capital firms are making bets in digital health, and investment is steadily increasing.

API Healthcare works with customers to improve transparency by tracking patients at home and during their hospital stay. The tools are also used by health institutions to gain insight into scheduling and staffing, so patients can be matched with the right care provider in real time. According to a news release, API’s tools are used by over 1,600 hospitals and staffing agencies in the U.S.

Once the transaction closes, the API Healthcare solutions will join GE Healthcare’s existing offerings and will be branded under the Industrial Internet portfolio.

“Health care productivity is more important than ever for hospitals as more patients enter the system and operational costs continue to climb,” said John Dineen, President and chief executive of GE Healthcare in a statement. “Hospitals need operational management systems to drive enterprise-wide efficiencies, reduce unnecessary costs, and enable improved patient care.”