Specialized healthcare software provider 3M Co. has bought itself an early Christmas present, M*Modal IP LLC’s medical technology business, for a “total enterprise value” of $1 billion.

3M said the acquisition, announced today, is intended to boost its own health information systems business by adding M*Modal’s artificial intelligence-based conversational software for physicians to its portfolio of products.

M*Modal’s cloud hosted AI systems are designed to help improve patient care and billing integrity by “enriching the content of patient electronic health records.” Its conversational assistant specializes in recognizing and transcribing medical speech. The software is used to record doctor’s conversations with their patients and add pertinent information to patient medical records.

That makes M*Modal’s technology a nice fit for 3M, which sells clinical documentation software and risk assessment systems. They capture patient data that can later be analyzed by doctors.

3M said the acquisition is all about expanding its presence in the healthcare technology market, which experts say has the potential to become a trillion-dollar market. The company competes against dozens of other companies in the sector, including fearsome rivals such as Amazon Web Services Inc., which recently launched a new machine learning service to mine medical records for better healthcare.

“This acquisition builds on our strategic commitment to invest in our Health Information Systems business and expand the capabilities of our revenue cycle management and population health priority growth platform,” Mike Vale, executive vice president of 3M’s Health Care Business Group, said in a statement. “Together, we will enable doctors to improve the patient experience, while enhancing documentation accuracy and operational efficiency for both providers and payers.”

“The saying “at the end of the day all companies become software companies” gets a feather in the cap with the acquisition of M*Modal by 3M,” said Holger Mueller, principal analyst and vice president of Constellation Research Inc. “Of particular interest are the speech assets of M*Modal. Speech is the new UX, people can speak faster than they can type, especially when the hands are busy and so it’s key to offer a natural environment to people for a better future of work.”

The exact price of the acquisition was not disclosed. The so-called “enterprise value” figure of $1 billion doesn’t reflect the actual purchase price, 3M said, but it didn’t offer an explanation for using that figure instead of the purchase price. 3M said the annual revenue of M*Modal’s technology business is about $200 million.

Image: 3M