A $402 million deal between IBM and the University of Pittsburgh Medical Center will save operating costs and improve productivity - while jointly developing information systems products that the entire healthcare industry may use to deal with serious diseases and epidemics and biological terrorism
Marianne Kolbosk McGee Information Week
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The healthcare industry, which has continued to stubbornly cling to paper-heavy processes and siled software applications, is trying to find ways to transform it into one integrated world of digital information, leading to better care and cost savings. The University of Pittsburgh Medical Center is heading down a new path in that direction, through a $402 million, eight-year agreement with IBM.
The unusual part of this agreement is the clause in which each of the parties undertakes to invest no less than 25 million dollars, and up to 200 million per party in total, in the joint development of software and systems designed to deal with major problems facing the healthcare industry. Among these tools - information systems that will make it possible to deal with epidemics and biological terrorism, cancer research and treatment, and electronic systems for managing medical records. If the work is carried out as planned, the medical center and IBM will create innovative information systems that help improve health services, and sell them together while dividing the profits between them. The University of Pittsburgh Medical Center operates 19 hospitals, a medical insurance company, specialist clinics and other businesses in the field of health services.
The current transaction is one of the biggest tests of IBM's business strategy in the field known there as "business-transformation services". It is also IBM's largest single healthcare deal of all time.
The more accepted and well-known part of the deal - which is also the largest - is estimated at 352 million dollars, and includes a total conversion of the information systems at the University of Pittsburgh's medical center to infrastructure made by IBM. IBM will replace the 40 storage systems that currently exist in the center with only two systems, while increasing the capacity by 25% every year - all in order to deal with the surge in the amount of digital information that will be produced at the medical center. In the eighth year, the center will have a storage capacity of 825 terabytes - compared to 180 today. At the same time, the number of Unix servers will be reduced from 162 to 61, 624 Intel servers running Windows systems will be consolidated to only 244, and every three years the 24,000 mobile and desktop personal computers will be replaced. . The University of Pittsburgh Medical Center will continue to manage its information systems activities by itself, through its staff - while receiving from IBM consulting services for information systems management and software development. Both companies expect a 20%-15% cost savings in information systems expenses, following the current transaction.
The most significant result of the transaction will be born if IBM and the University of Pittsburgh Medical Center succeed in promoting the health care industry, on the way to a wider use of information systems. Wireless communication and radio tag identification in hospitals may be a direction for such development, along with tools for handling bioterrorism attacks, cancer research, and electronic record management.
And the University of Pittsburgh Medical Center has gained some experience in financing and setting up companies based on technologies developed within it, most notably Stentor, which produces digital medical imaging systems. Dan Pelino, IBM's vice president for corporate marketing, predicts that the first commercial products expected to be born as part of the collaboration will be tools for sharing medical information and systems for managing the fight against biological terrorism.
Another potential area for cooperation is the integration of the medical center's clinical knowledge in the field of cancer, for example, together with IBM technologies in the field of supercomputing and computer analysis. In the last year, IBM announced a series of cooperation frameworks for the development of personalized healthcare systems, in collaboration with leading providers of healthcare services in the USA.
Thus, for example, researchers at the Mayo Clinic work together with IBM researchers and consultants, in an attempt to map ways to improve diagnosis and treatment based on the data collected from the database of patients treated there. As part of the project, the data of 4.4 million patients were analyzed and cross-referenced, in an attempt to locate significant repeating patterns. At the Cleveland hospital, IBM is carrying out a data mining project designed to improve the treatment of heart patients and other diseases.
IBM revealed the establishment of a new testing laboratory linking its facilities in San Jose, California, Rochester, Minnesota, and Haifa, Israel - in order to perform simulations of the transfer of medical records. At the same time, IBM acquired the company Healthlink, which provides services and consulting in the field of information technologies for the health industry.
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