STAT: IBM Watson Health downsizes its work with hospitals

IBM Watson Health leadership reportedly told employees June 13 it plans to refocus its business strategy, which includes cutting down on its work with hospital clients, according to STAT.

Because of changes to the ACA, hospitals aren't as willing to spend resources managing their pay-for-performance contracts, executives told employees, although they did not specify which changes to the law are affecting the shift in IBM's strategy. STAT suggested the main driver could be some of the changes the Trump administration made to the law's reimbursement models.

The meeting sought to discuss IBM's plans for the future of Watson Health and address recent layoffs, which affected employees at three data analytics firms IBM recently acquired — Truven, Explorys, and Phytel.

IBM told STAT the layoffs were a normal part of restructuring, particularly following its acquisitions, and were reflective of its goals "to focus on the high-value segments of the IT market."

However, a separate STAT investigation, based on interviews with four former Watson Health employees, showed the Watson Health division suffered from a disorganized structure that discouraged collaboration and fueled internal competition. The report revealed the Watson Health division failed to deliver on its contracts with some hospitals and, coupled with external market competition, the former employees claimed IBM was starting to lose clients.

IBM responded to the STAT investigation in an internal memo signed by Watson Health general manager Deborah DiSanzo calling its report "speculative" with "inaccurate information," but STAT noted it has not received any requests from IBM to correct those alleged inaccuracies.

"Do not be misled by these reports," the memo said, referring to the STAT report. "We know more about analyzing health data than anyone else in the world. We have been doing it longer than anyone else, and we have 13,000 clients who know our strengths first-hand."

IBM officials told employees during the meeting that they would continue to fulfill existing contracts with hospitals but will begin pivoting resources elsewhere. Officials added IBM will continue developing some of its hospital-facing products and could speed up some of the projects it has been slowing down.  

The meeting also discussed ways of folding the three acquired companies into Watson Health and its new focus. The companies may begin working on integrating data to support Watson's artificial intelligence to help improve patient treatment, STAT reported. And, according to the memo, Watson Health will continue to develop "cognitive technologies that address the world's most pressing healthcare challenges."

Click here to access the STAT report.

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