Defense Firms Stockpile Health IT

First came word that major health insurers were getting into the health IT business. Now some of the world's largest defense contractors are entering the health IT ring as a means of hedging their bets against declining defense budgets.

In the past month both General Dynamics and Lockheed Martin Corp. announced health IT acquisitions. General Dynamics is paying about $960 million to acquire Vangent Inc., which provides health IT and business systems to federal agencies, including health informatics and information exchange, electronic health records and data analytics. The deal is expected to be final by Oct. 1, with Vangent becoming part of General Dynamics Information Technology.

Lockheed Martin is acquiring QTC Holdings Inc., described as the largest provider of outsourced medical evaluation services, including IT-enabled case management, to the U.S. government and the Department of Veterans Affairs. The deal, terms of which were not announced, should be complete by the end of the year, Lockheed Martin says in a news release. QTC will become part of Lockheed's Information Systems & Global Solutions business.

Industry analysts told the Washington Post that defense contractors are looking to reposition themselves into a growth industry as budget cuts eat away at defense spending. Government contractors across the board are increasing their health IT holdings, George A. Price Jr., senior equity research analyst for information technology services at BB&T Capital Markets, told the paper.