Dive Brief:

• Healthcare consultancy Premier Inc. has agreed to acquire Stanson Health, a software-as-a-service provider of clinical decision support tools for $51.5 million.
• Los Angeles-based Stanson, which was founded at Cedars-Sinai Medical Center five years ago, makes CDC tools that are integrated directly into EHR workflow, enabling real-time, patient-specific actions at the point of care. The company's software is compatible with major EHR systems, including Epic, Cerner and athenahealth. 
• Stanson is also developing a product that will provide near-real-time prior authorization decisions for medical and pharmacy benefits.

Dive Insight:

Premier CEO Susan Devore said in a statement that Stanson's CDC tools "will be key to realize Premier's vision of an enterprise analytics and performance improvement platform, allowing us to provide evidence-based recommendations that improve quality and safety, while avoiding treatments that do not add value."

At the same time, the prior authorization tool — which is still in development — will help to ease the burden associated with obtaining an extra layer of payer approval before filling certain prescriptions, a growing trend among insurers. 

Physicians like decision support tools, and vendors are responding. According to a recent Signify Research report, demand for CDC products could help push the artificial intelligence-enabled imaging sector over the $2 billion mark by 2023.

But accuracy is crucial when patients' lives are at stake, and poor results can harm not just patients but also a company's reputation. IBM Watson Health took a drubbing in the press earlier this year when a STAT report said the company's supercomputer wrongly advised doctors on how to treat patients' cancers. 

Last year, FDA released two draft and one final guidance aimed at shedding more light on the regulation of digital health products, including when it would regulate CDC software as a medical device. The draft "Clinical and Patient Decision Support Software" guidance exempts certain CDS from regulation, such as when a doctor can independently review the underlying basis for CDC's recommendation.

Premier plans to finance the acquisition with existing cash. The deal also provides for an earn-out opportunity of up to $15 million based on specified product delivery and revenue targets.

The transaction is expected to close in by the end of the year, pending regulatory approvals.