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What Does IBM’s Acquisition of Merge Healthcare Say About the Healthcare IT Market?

August 7, 2015
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IBM’s acquisition of Merge Healthcare caps a series of recent acquisitions, and reflects major shifts taking place now in several healthcare IT vendor sectors

As if everyone’s heads in healthcare IT weren’t already spinning like that of Linda Blair in 1973’s “The Exorcist,” here comes yet another acquisition in healthcare IT, this time the Armonk, N.Y.-based IBM announcing on Thursday its acquisition of the Chicago-based Merge Healthcare.

All mergers and acquisitions are interesting, but this one offers particular facets worth pondering. First of all, of course, its timing, less than four months after that giant company had just swallowed up the Dallas-based Phytel and the Cleveland-based Explorys back in April, a move announced during the HIMSS Conference.

That double acquisition is one of the reasons that we editors at Healthcare Informatics made IBM one of our “Most Interesting Vendors” this year, as its trajectory has encapsulated some of the mergers and acquisitions that have taken place in order to give some vendors a particular edge as competition intensifies in the healthcare IT world. As Senior Editor Rajiv Leventhal wrote regarding IBM’s analytics push, “Enter the Watson Health Cloud, which IBM will sell to doctors, hospitals, insurers and patients. That offering will be the centerpiece of a new dedicated, Boston-area business unit, IBM Watson Health, which now includes both Explorys and Phytel.” Leventhal quoted Anil Jain, M.D., chief medical officer (CMO) for Explorys, as saying that “[IBM] is complimenting much of what we do around traditional analytics using machine learning algorithms with some of the cognitive computing and the Watson analytics that Watson Health group will be leveraging. We became the content that will fuel some of the next generation analytics that Watson has become famous for.”

In a blog published today on, staff writer Erik Ridley wrote this: “For IBM's new Watson Health unit, the deal gives the company access to Merge's image management and analysis software and its installed base of more than 7,500 U.S. institutions, clinical research institutes, and pharmaceutical companies. IBM is adding Merge to other recent acquisitions, such as population health firm Phytel and cloud-based healthcare intelligence company Explorys.”

Ridley went on to note that “IBM plans to offer Watson Health Cloud to analyze and cross-reference images against lab results, electronic health records (EHRs), genomic tests, clinical studies, and other health-related sources. In aggregate, these represent 315 billion data points and 90 million unique records, according to the company. This could provide Merge's installed base with a useful consolidated, patient-centric view of current and historical images, EHRs, data from wearable devices, and other related medical data.”

So far, so good. I think that IBM is gaining clear advantage in acquiring Merge Healthcare at this time., as it brings imaging informatics into the fold and potentially will integrate elements of imaging informatics with its already-advancing work in analytics. Indeed, Joe Marion, a Wisconsin-based consultant who blogs regularly for Healthcare Informatics and who is one of the most knowledgeable observers of the imaging informatics sector around, sees clearly the advantages to this pairing. As Joe wrote Thursday in a blog on this site, “Today, IBM is a different company than it was thirty years ago, as is the healthcare industry.  Much of the “big iron” emphasis is gone, and the company has much more of a services focus these days.  Cloud computing was never a factor in the past, and today, coupled with Watson, it offers much more potential for delivery of storage and analytics solutions.”

Joe further noted that, “In the age of past efforts, there were much larger barriers between Information Technology (IT) and clinical departments.  That is why IBM chose to partner with GE to address RIS-PACS [radiology information system/picture archiving and communications system (issues)] previously, as the two complemented one another in terms of hospital administration emphasis.  Today, there is much more IT emphasis on clinical systems and their integration across the enterprise.  And,” he added, “the healthcare environment today is radically different than in the age of past efforts, given increased regulation and greater provider consolidation.  An IBM-Merge combination should have much broader appeal to integrated delivery networks (IDN’s) who might benefit from greater interoperability and better business analytics.”