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May 26, 2005

UPMC, IBM announce pact

IBM and UPMC announced that they have entered into an eight-year, $402 million joint development agreement to address some of the biggest problems facing the health care industry today.

The agreement has two major components: First, UPMC’s technology infrastructure will be re-engineered completely to an on-demand environment that is geared to innovation. This endeavor, valued at $352 million, builds on UPMC’s current electronic health record strategy and takes advantage of existing technology to integrate information from across all of its facilities to ensure patient information is available.

Second, IBM and UPMC will invest in strategic initiatives to develop medical technologies and information systems that address specific patient care and public safety initiatives in areas such as electronic patient records, biosecurity and information-based medicine.

IBM and UPMC will collaborate to commercialize these solutions. The two organizations initially will invest jointly a minimum of $50 million, with a total possible joint investment of $200 million throughout the life of the contract.

At UPMC, the on-demand environment will mean that information services will be available in the required amounts whenever needed.

When the eight-year project concludes, cost savings of 15-20 percent per year will be realized while at the same time, the system’s functional capacity will increase, officials said.

Under the agreement, IBM and UPMC will develop technologies to benefit patient care and to improve utilization of medical research information. The products resulting from these strategic initiatives are expected to have great commercialization value because of their wide applicability to other health care systems.

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