IBM’s acquisition of Initiate Systems, the Chicago master data management (MDM) company, signals a significant foray into the MDM sphere for IBM, and executives say the acquisition will better establish IBM's offerings to the healthcare IT field.
The financial details of the deal, which IBM announced on Feb. 3, were not disclosed.
The acquisition will help give IBM's healthcare clients "a comprehensive solution for delivering the information they need to improve the well-being of patients at a lower cost," said Arvind Krishna, IBM's general manager of information management.
MDM software allows firms to centrally organize customer, employee, product, supplier, and account data for enterprise-wide use. In purchasing Initiate – barely a week after its competitor Informatica acquired the MDM firm Siperian for $130 million – IBM hopes to better enable government to share information across multiple agencies and also offer healthcare companies more efficient and consistent access to clinical data.
"In the U.S. alone, there's $36 billion in government stimulus funds to facilitate the adoption of electronic health records and health information networks," said Krishna. "Both being places where Initiate's solutions play strongly."
As John Moore of Chilmark Research wrote on his Healthcare IT News blog last month, IBM looks to have "picked up one of the real jewels in the industry who is ideally positioned to capitalize on a significant portion" of the ARRA largesse that's finding its way into the healthcare sector.
“Core to HITECH legislation is that funding be used to promote 'information exchange for care coordination,’” Moore writes. “Such coordination of care hinges on a clinician’s ability to pull up the right records, for the right patient, at the right time. Tapping such patient information tucked within an EHR, an HIE, a public health database, etc. at the click of a mouse is done via MPI, but this is no trivial task. Most software vendors offer an MPI solution within their product based on deterministic algorithms. But these algorithms, that rely on such things as name, address, maybe a social security number, are often not robust enough for large data sets. More advanced, albeit more complex, MPI solutions rely on probabilistic algorithms, which is Initiate’s core competency."
The upshot, Moore says, is that the Initiate acquisition is an "excellent move by IBM and an acquisition that they will be able to leverage in other markets such as their significant presence in supply chain management."
Moreover, "IBM has a not so insignificant hardware (large database servers) and software businesses that can be combined with Initiate to provide healthcare with a larger, more complete solutions suite."
