IBM wants to get out of health by selling its Watson Health business

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The news: IBM tries to sell his Watson Health business – just about a year after it was first reported to be considering a sale in 2021.

  • For the context, Watson Health, formed in 2015, develops AI-based analytics solutions for hospitals, payers and pharmaceutical companies.
  • Last February, the Wall Street Journal reported that IBM was considering selling Watson Health to focus more on its cloud computing business.
  • IBM has been working with BofA Securities to find a buyer, which it hopes to select by the end of the month, according to Axios.

How we got here: Over the years, IBM has tried to take healthcare further with acquisitions and partnerships, but has not grown into an industrial powerhouse as expected and failed to be profitable.

  • From 2015 to 2016, Watson Health invested billions in the acquisition of healthcare analytics companies Explories and Phytel, imaging company Merge health care, and its $ 2.6 billion buyout of claims analysis firm Truven.

Another thorn in the side: Partners blasted Watson Health for failing to deliver solutions as promised.

  • For example, Watson Health came under fire for producing erroneous treatment recommendations for hypothetical cancer patients during an internal testing phase in July 2018, according to internal documents cited by STAT.

The problem: IBM’s eagerness to ditch Watson Health, combined with the troubled history of unity with some of its partners, may mean the business will sell at a loss.

  • IBM spent more than $ 4 billion to build Watson Health, but it is reportedly looking for around $ 1 billion in sales, per Axios.

The overview: Tech companies do not have an easy path to gain a foothold in the healthcare industry. Even with their power and their pockets flush, tech companies have yet to come up with a cutting edge solution in this complex industry.

  • Google firm its own Google Health division in August 2021 after failing to gain enough ground due to lack of consumer trust and supplier-insurer relationships, and problems delivering a seamless user experience.
  • Trust issues in particular have been a big hurdle for tech companies looking to break into healthcare: 56% of consumers in a 2021 survey said they wouldn’t trust tech companies to keep their health information anonymous.
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