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IBM Sells Watson Health

January 21, 2022 News 10 Comments

IBM announced this morning that it has signed a definitive agreement to sell its Watson Health business to technology-focused investment firm Francisco Partners. Terms were not disclosed, but previous reports said that IBM was seeking a price in the $1 billion range.

The assets involved include Health Insights, MarketScan, Clinical Development, Social Program Management, Micromedex, and imaging software products.

IBM says the sale, which it expects to close in the second quarter, will allow it to focus more on its platform-based hybrid cloud and AI strategy.

IBM launched Watson Health in early 2015 and made a series of acquisitions that cost $4 billion. They included Merge Healthcare, Truven Health Analytics, Phytel, and Explorys.

IBM’s then- CEO Ginni Rometty called the project a “moon shot,” but her replacement was less enthused about the business. An analyst said last week that IBM is getting rid of assets that divert attention, require capital investment, and present a risk to the company’s reputation, concluding that “Watson Health certainly qualifies for all three.”

Other active healthcare-related investments of Francisco Partners include Avalon, GoodRx, Kyruus, Orchard Software, QGenda, Trellis, and Zocdoc.



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Currently there are "10 comments" on this Article:

  1. Not surprised. Having been involved in various ways with Watson and pre-Watson IBM health care efforts, it should not be surprising that another corporate giant bails out of health care. Google, Haven, Dosia, etc., etc., the list goes on. As I’ve said on many occasions–and paraphrasing Peter Drucker–health care is the most complex industry in our economy. Maybe it is time for the realization that “transforming” health care is at best a fool’s errand. If you don’t understand what makes health care so complex, you will fail at trying to change it. My best immodest recommendation, read my book!!!

  2. The capabilities of AI in medicine have been trumpeted for decades, but the focus has always been on solving interesting problems rather than the ones the healthcare industry is actually facing. IBM Watson was a “Here we go again.” If they had started with the less glamorous but higher cost problems like streamlining administrative workflows, there might have been some real transformation to be had.

  3. Check out HIStalk August 13, 2018…

    As I have mentioned then…

    Mechanical Turk says:
    Watson for Oncology isn’t an AI that fights cancer, it’s an unproven mechanical turk that represents the guesses of a small group of doctors…
    See https://boingboing.net/2017/11/13/little-man-behind-the-curtain.html

    Maybe physicians didn’t like the idea of a mechanical turk impersonating AI ?
    Maybe physicians lost all credibility when the above (criminal ? dishonest ?) fiasco was discovered ?

    More interesting – how can Watson recover from this , if at all ?
    Tsk, tsk, tsk

  4. The quote from IBM seems to reflect that they peddled a “money and reputation pit” of a business down the road for some significant cash. Not sure how I’d feel about their sentiment if I was Fransisco Partners writing the check. The truth is that this AI and ML journey of turning discrete patient health data into insights and action is a battle that has to be fought and won and we have so many companies coming at this battle from so many different angles. I can’t help but think we in healthcare will have to work more collaboratively, economically efficiently and smarter to make a significant impact.

  5. IBM Watson was a classic case of technology in search of a solution. Yes there are clinical errors…but why focus ‘AI’ on replacing the clinician when 35%+ of fast-growing healthcare spend (as BK says above) is on administration? Focusing on bending the cost curve would have been a more fruitful (if less glamorous) set of use cases. One of my previous employers invested $15M in a joint partnership with Watson based on a brief phone call between our leadership and IBM. Many thousand engineer-hours later, we had nothing to show for it. (Any member of our product or internal clinician teams could have told them that.) Some tremendous marketing and sales talent has had short cups of coffee at IBM Watson before going on to Better Things – another leading indicator of a plane about to crash in the Everglades. The only winners were consultants, lawyers and accountants – just like any divorce,

    • Ah but IBM did try the administrative side. In fact they initiated it in 1968 with a product called SHAS (shared Hospital Admin System). They owned that market thru the 70s running on their mainframes. It’s how /where SMS and McAuto got started. Half baked SHAS software (user must complete baking) running on a big expensive box. Then along came minis, micros, c/s, internet, etc. and IBM cut and ran in the 90s. Then they did the same dance for various clinical department apps probably 5 times over.

      • FrankP, good point. IBM has never understood application software and managed to screw up leadership positions in several vertical markets. Remember MAPICS / MRP (pre-ERP, I’m showing my age) software? IBM sold the both platform and the software as a package and still managed to lose its leadership role to JD Edwards, Oracle, and SAP who all ran on their platforms. They screwed up Lotus 1-2-3 and lost out to Microsoft. Earlier they had DisplayWriter word processing software as part of a single hardware/software package and lost out to WordStar, WordPerfect, and then Word.

  6. My opinion – IBM Watson was the palm reader of our industry.

    Results from it were as random as those from a voodoo priest tossing chicken bones on the table and defining out their meaning. Your bound to find something…..eventually!

    Perhaps I’ll read ole Lynn’s book or better yet- lets just hire a couple of report writers and pull a couple of canned reports from the archive that tell us how much, how effective, how long and how often.







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