Oh say can you see, Watson?

ARMONK, N.Y. & CHICAGO—In early August, IBM announced that its famous Watson cognitive computing system will gain yet another superpower with the ability to “see” thanks to a planned $1-billion acquisition of Merge Healthcare. The deal will bring Watson Technology together with a leader in medical images, IBM says—and this is a move that could make waves in drug discovery and development, and not just in clinical applications.

But first, a bit of history, if you aren’t already aware of Watson from its appearance on television game show “Jeopardy!,” where it trounced champions Ken Jennings and Brad Rutter. Watson is, in IBM’s words, “the first commercially available cognitive computing capability representing a new era in computing.” The system, delivered through the cloud, analyzes high volumes of data, understands complex questions posed in natural language and proposes evidence-based answers. While it's far from actual artificial intelligence, Watson continuously “learns,” gaining in value and knowledge over time from previous interactions.

In January 2014, IBM launched the IBM Watson unit, a business dedicated to developing and commercializing cloud-delivered cognitive computing technologies. The move signified a strategic shift by IBM to deliver a new class of software, services and apps that improves by learning, and discovers insights from massive amounts of Big Data. As part of the unit, the company has increased the number and diversity of cognitive computing services delivered to its partners, adding new beta Watson services in February 2015 and scalable deep-learning application program interfaces, or APIs, with the acquisition of AlchemyAPI in March 2015.

In April 2015, the company continued to build on its strengths in cognitive computing, analytics, security and cloud with the launch of IBM Watson Health and the Watson Health Cloud platform. The new unit will help improve the ability of doctors, researchers and insurers to innovate by surfacing new insights from the massive amount of personal health data being created daily. The Watson Health Cloud allows this information to be anonymized, shared and combined with a dynamic and constantly growing aggregated view of clinical, research and social health data.

Which brings us to Aug. 6 of this year and the announcement that Watson will gain the ability to “see” by combining Watson’s advanced image analytics and cognitive capabilities with data and images obtained from Merge Healthcare Inc.’s medical imaging management platform. By acquiring Merge, a leading provider of medical image handling and processing, interoperability and clinical systems designed to advance healthcare quality and efficiency, IBM hopes to “unlock the value of medical images to help physicians make better patient-care decisions.”

In effect, adding imaging capabilities allows Watson to move beyond natural language by giving it eyes, in a sense. IBM notes that medical images are by far the largest and fastest-growing data source in the healthcare industry, and perhaps the world, accounting for at least 90 percent of all medical data today. They also account for a lot of challenges related to medical data. As IBM points out, radiologists in some hospital emergency rooms are presented with as many as 100,000 images a day, tools to help clinicians extract insights from medical images remain very limited and require most analysis to be done manually and, at a time when the most powerful insights come at the intersection of diverse data sets (medical records, lab tests, genomics, etc.), medical images remain largely disconnected from mainstream health information.

All of this may sound a bit disconnected from discovery and development around therapeutics and diagnostics, but it isn’t, according to analyst firm Frost & Sullivan.

“For IBM, the acquisition [of Merge] extends its access to a large new U.S. customer base and increases its competencies in drug development and clinical trials. In addition, this provides new avenues of growth for Watson Health through the inclusion of imaging,” according to Nadim Daher, a principal analyst with Frost & Sullivan.

“[Merge’s] acquisition by IBM Watson Heath is the culmination for Merge Healthcare of a long series of mergers, acquisitions and industry partnerships over the last several decades. Merge’s operation going forward as the imaging arm of Watson Health stands every chance to be synergistic in many ways,” Daher adds. “As a best-of-breed imaging informatics company dedicated to advancing the field of medical imaging, Merge will be able to deliver industry-leading analytics capabilities to its imaging customers and to apply its imaging expertise within the broader context of health IT.”

Daher does acknowledge the acquisition deal is “great news for the medical imaging community as well, as it reinforces the notion that medical imaging has a lot to contribute to healthcare’s biggest initiatives, such as population health, personalized medicine, IT interoperability and health analytics. Indeed, these great challenges that healthcare is bound to face over the next decade cannot be met unless every specialty, including imaging, stands up to contribute its value, its strength and its insight to the broader effort.”

Merge’s technology platforms are used at more than 7,500 U.S. healthcare sites, as well as most of the world’s leading clinical research institutes and pharmaceutical firms, to manage a growing body of medical images, IBM notes. The vision is that these organizations could use the Watson Health Cloud to surface new insights from a consolidated, patient-centric view of current and historical images, electronic health records, data from wearable devices and other related medical data, in a HIPAA-enabled environment.

Under terms of the transaction, Merge shareholders would receive $7.13 per share in cash, for a total transaction value of $1 billion. The closing of the transaction is subject to regulatory review, Merge shareholder approval and other customary closing conditions, and is anticipated to occur later this year. It is IBM’s third major health-related acquisition—and its largest—since launching its Watson Health unit in April, following Phytel (which brought population health assets) and Explorys (which was focused on cloud-based healthcare intelligence).

“As a proven leader in delivering healthcare solutions for over 20 years, Merge is a tremendous addition to the Watson Health platform. Healthcare will be one of IBM’s biggest growth areas over the next 10 years, which is why we are making a major investment to drive industry transformation and to facilitate a higher quality of care,” said John Kelly, senior vice president of IBM Research and Solutions Portfolio. “Watson’s powerful cognitive and analytic capabilities, coupled with those from Merge and our other major strategic acquisitions, position IBM to partner with healthcare providers, research institutions, biomedical companies, insurers and other organizations committed to changing the very nature of health and healthcare in the 21st century. Giving Watson ‘eyes’ on medical images unlocks entirely new possibilities for the industry.”

IBM has also noted that cutting-edge image analytics projects underway in IBM Research’s global labs suggest additional areas where progress can be made. They include teaching Watson to filter clinical and diagnostic imaging information to help clinicians identify anomalies and form recommendations, which could help reduce physician viewing loads and increase physician effectiveness.

“As Watson evolves, we are tackling more complex and meaningful problems by constantly evaluating bigger and more challenging data sets,” Kelly said. “Medical images are some of the most complicated data sets imaginable, and there is perhaps no more important area in which researchers can apply machine learning and cognitive computing.”

“Merge is widely recognized for delivering market leading imaging workflow and electronic data capture solutions,” said Justin Dearborn, CEO of Merge. “Today’s announcement is an exciting step forward for our employees and clients. Becoming a part of IBM will allow us to expand our global scale and deliver added value and insight to our clients through Watson’s advanced analytic and cognitive computing capabilities.”