What's Next for Healthcare AI After IBM's Watson Health Disappointment?

IBM (IBM 0.27%) is saying farewell to Watson Health. The tech giant plans to sell the healthcare-focused artificial intelligence (AI) business to a private equity firm. In this Motley Fool Live video, recorded on Jan. 26, Fool contributors Keith Speights and Brian Orelli talk about what's next for healthcare AI after IBM's move.

Keith Speights: Brian, a company I don't know that you and I have talked about at all since we've been doing this together for probably going on at well over a year now. But IBM, of course, a technology giant, but IBM has been involved quite a bit in healthcare in recent years.

A few years ago, the company seemed to be on to something really big with its Watson Health artificial intelligence system. But IBM is throwing in the towel. It plans to sell Watson Health to a private equity firm for a reported $1 billion dollars.

First of all, why is IBM making this move? Secondly, what do you think is next for healthcare artificial intelligence after this disappointment?

Brian Orelli: Yeah, I feel like Watson was a party trick of healthcare, two Jeopardy contestants, but I'm not sure speed is the most important improvement of healthcare outcomes. IBM seems to be selling off Watson because it's just not useful for improving healthcare outcomes. That's what people actually care about not how quickly can I come up with an answer.

In the immediate future, the benefit of AI I think is likely to be at the molecular level, so there's companies using AI to find drugs for drug development, and I think, and then once a drug target is identified, AI can be used to develop drugs that can inhibit that target, and so I think those are probably the two biggest uses for AI right now.

Speights: I think you're probably right. I will admit though, Brian, that when IBM first rolled out Watson and said they were going to apply their AI technology to healthcare. I thought there could be a lot of opportunity here because there's so much change going on in the medical world and how physicians stay abreast of all the changes in new research is just staggering how much new information comes out every week, every month.

I thought, hey, AI might be great for being able to process all of that and help come back with really solid recommendations. I guess Watson Health has had some successes, but it's just not been nearly what everyone had hoped it would be.

Orelli: Yeah. I think I agree with you I had high hopes too, but I think that it's not been able to come up with information that they actually needed to improve outcomes, and that's really what doctors and their patients want.

Speights: I think you're right. AI targeting drug development is really where the action is right now. I would not rule out AI being much more involved in diagnosis down the road. I think there's obviously some wrinkles to iron out here yet.

Orelli: I'm sure that this private equity firm that's spending a billion dollars thinks they can improve it. Presumably, [laughs] if you're spending a billion dollars on anything here, you're hoping that they can get better.

Speights: Exactly.