What is behind the Kaiser-IBM deal?

IBM is now in a position to drive open standards throughout healthIT, thanks to its own ability to scale, its position within the open source world, and the Kaiser contract, which covers 8.6 health consumers.

Most media reports about the Kaiser-IBM deal signed last week emphasize its potential for job cuts.

The deal will cut 860 jobs, writes the San Francisco Chronicle. The deal loses 275 local jobs, writes the San Jose Mercury-News. Cuts could hit Silver Spring, writes the Washington Business Journal.

Yes and no. Mostly no.

This is a fairly typical deal, under which IBM will manage Kaiser's data center for seven years, and Kaiser estimates it will pay $500 million. In fact a large number of the current Kaiser employees will become IBM'ers -- the good ones will have better jobs.

I see two real headlines here:

  1. The deal puts a period on Kaiser's long-running Epic saga, which became the medical version of IBM's System 360 disaster in the 1960s. Both projects resulted in something important, even transformational. Both nearly drove their sponsors under.
  2. The deal makes IBM a major player in determining the future of healthIT. This may be the bigger story. Taking on Kaiser makes this a management challenge, and it's the management challenge of healthIT that is going to be key.

The healthIT field until now has been dominated by point solutions and development efforts. Cerner, McKesson, GE, Siemens, and now Microsoft. This is due for a major shakeout, as the industry must scale well beyond its wildest schemes.

Now IBM, through Kaiser, has a big seat at that table. IBM knows standards negotiation, it knows management, it knows both the nitty and the gritty.

IBM is now in a position to drive open standards throughout healthIT, thanks to its own ability to scale, its position within the open source world, and the Kaiser contract, which covers 8.6 health consumers.

All this is very important. Kaiser gets a handle on costs, and will go down in history as a leader in the creation of Electronic Medical Records. IBM takes the ball and runs with it.

For the first time, I can say a touchdown in healthIT is possible.

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