By Joseph Goedert

Kaiser Permanente will outsource much of its information technology operations to IBM Corp. in a deal that will cut 700 IT jobs. The Oakland, Calif.-based provider/payer organization, however, could rehire up to 40 percent of affected employees for other positions.

The outsource contract is worth $500 million over seven years. Armonk, N.Y.-based IBM will manage data center operations, including servers, storage systems and related software. Kaiser will continue to manage applications, including its electronic health records system.

Kaiser also will eliminate about 160 additional IT jobs in another reorganization initiative. The organization serves 8.6 million members in nine states and the District of Columbia.

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