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Kaiser Permanente Outsources, Cuts 860 IT Jobs

IBM will manage the health care network's data centers under seven-year deal.

Kaiser Permanente said it plans to shed 860 U.S.-based information technology positions, most of which will be eliminated as a result of a deal under which the health plan provider will outsource tech work to IBM, the companies disclosed Monday.

Kaiser Permanente officials said the seven-year deal with IBM, reportedly worth $500 million to Big Blue, will help make their operations more efficient.

"This agreement, grown out of our long standing strategic relationship with IBM, will allow us to build on our leadership in health care technology," said Kaiser Permanente CIO Phil Fasano, in a statement. Fasano also told the San Francisco Chronicle that Kaiser Permanente will lay off an additional 160 IT workers around the nation as part of an efficiency drive.

An unspecified number of IT workers axed as a result of the outsourcing agreement will be eligible for jobs at IBM.

The deal calls for IBM to manage Kaiser Permanente's data center operations, most of which are located in California and Maryland. IBM also will manage the health care company's computing, storage, and related software needs.

Kaiser Permanente will continue to manage its business applications, and its HealthConnect electronic health records system. HealthConnect is used by more than 14,000 physicians and other health care providers.

President Barack Obama has said he wants all Americans' health records digitized within the next five years to improve efficiency and patient safety, and to help cut costs. The push could prove to be a boon to outsourcers, such as IBM, that maintain strong practices in the health care field. Obama's stimulus bill calls for $19 billion in health care IT spending.

"IBM sees information-based medicine helping propel health care from its currently unconnected local and regional sectors into a borderless industry that spans the globe," said Chris Nicoletti, IBM's VP for health care and life sciences, in a statement.

On Tuesday, IBM announced that American Occupational Network and HyGen Pharmaceuticals are digitizing health records and streamlining business operations through cloud-based software from IBM and business partners MedTrak Systems and the System House.

InformationWeek has published an in-depth report on HIPAA. Download the report here (registration required).

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