IBM enlarges health IT stake with Initiate buy

IBM significantly advanced its already large presence in the health IT services industry with the acquisition of Initiate Systems, a major provider of software that helps improve information sharing between organizations.

Initiate already has a number of government customers, including the Alberta Ministry of Health and Wellness, the State of North Dakota's Department of Health and Human Services, and the U.S. Department of Veterans Affairs.

One of its major users is Sutter Health, a network of doctors and hospitals that serves over 100 communities in Northern California.

IBM, meanwhile, has built a $4 billion a year healthcare and life sciences business that ranges globally, and which has been involved in more than 3,000 health care initiatives. However, officials expect the Initiate purchase to give them even more clout.

Initiate operates in an area of the IT industry called master data management (MDM), which allows organizations to collect data about customers, citizens, employees and others from a wide range of different sources, and then present them in a single, heterogeneous view.

Arvind Krishna, general manager of IBM's Information Management business, pointed to the fact that there are more than $36 billion in government stimulus funds in the U.S. alone that are available for electronic health records and regional health information networks.

That kind of effort is being replicated around the world by other countries, said Bill Conroy, president and chief executive of Initiate. The IBM deal will enable his company to quickly scale to the level it needs to get to take advantage of this, he said.

However, it's also a defensive move in some part by IBM, as it's competitors are also making moves in this arena. For example, Informatica, a major data integration company, in January bought Siperian, another leading vendor of MDM solutions.

Market watcher Forrest Research said the Initiate purchase should help IBM fend off is competitors, but could also help IBM "take ownership" of both the healthcare IT and public sector IT markets.