Former GE CEO Immelt Talks Uber, A.I., and a Rejected Bid for Epic
Artificial intelligence holds promise for healthcare in areas like radiology, but it could be tough sledding for businesses selling narrowly focused products to one customer at a time. The winners in this emerging sector will figure out how to integrate A.I. tools into a broader platform that offers clear value for doctors, hospitals, insurers, and patients.
That was one of the opinions shared by former General Electric chief executive Jeff Immelt on Thursday morning at Healthegy’s annual Digital Healthcare Innovation Summit in Boston. It was one of Immelt’s first public appearances since recently departing GE (NYSE: GE), after a 16-year run leading the Boston-based industrial giant. (In the above file photo, Immelt is pictured left, with new GE CEO John Flannery.)
In a wide-ranging Q&A led by Flare Capital Partners’ Bill Geary, Immelt chatted about Uber, which considered hiring him as CEO over the summer; his rebuffed attempt to partner with or acquire at least a piece of Epic Systems, back when he was running GE’s healthcare business in the 1990s; corporate venture funds; and what’s next for him. Here are some of the highlights of the conversation:
—Uber’s lessons for healthtech startups: Immelt called Uber an “amazing company” and suggested that healthtech companies should follow the ride-hailing giant’s model of combining a digital platform with services that provide value to customers.
Right now, a lot of healthtech companies are offering “point solutions,” Immelt said, meaning a product that tries to solve one particular problem.
“Point solutions are hard,” he said. “If you have to go [sell] door-to-door in this industry, it takes a decade or 15 years.”
For example, Immelt said he thinks A.I. will definitely have an impact on radiology. But “are there going to be really great companies that just do A.I. in radiology? My answer is, I’m not sure; I don’t think so.”
—Courting Epic: Immelt said his shortest meeting ever was in 1996 with Judy Faulkner, founder and CEO of Epic, the electronic medical records software company. Immelt was in charge of GE Healthcare at the time, and he drove from his office in the Milwaukee area to Epic’s headquarters near Madison, WI, about 90 minutes west.
Immelt suggested GE and Epic work together, and perhaps GE could acquire parts of Epic’s business, Immelt recalled saying. (GE makes X-ray machines and other medical equipment, but it also sells electronic medical records software.)
“She just said, ‘No, no interest,’” Immelt said. “It was a five-minute meeting.”
Epic’s business has expanded significantly in the two decades since that meeting, capitalizing on the healthcare industry’s digitization push, which was supported with about $30 billion in federal subsidies during the Obama administration.
Meanwhile, Immelt said he also considered a deal to acquire Cerner, another electronic medical records software firm. But he thought the price being discussed—$2 billion—was too expensive. He didn’t say when the deal was being considered, but Cerner’s (NASDAQ: CERN) market valuation is currently more than $23 billion.
For all the money spent on implementing digital health records, most of the hospital CEOs Immelt talks with still “don’t know what they have, don’t know how to use it, and they aren’t getting a return,” he said. Thus far, this first phase of digital innovation in healthcare has basically just been “wallpaper,” he said.
“The first wave was about connectivity; it really wasn’t about value creation,” Immelt said. In “the next wave, I think people are going to be more discerning about [improving patient] outcomes and value and things like that.” Nevertheless, he added, “I think it’d be hard to do something valuable without maybe putting in this first wave.”
—Corporate venture funds: When asked about the performance of corporate venture funds like GE’s, Immelt pulled no punches.
“I’d say most of us have stunk at it, really for a long time,” he said. “We’ve been company killers.”
GE Ventures started turning things around after it hired Sue Siegel, previously of Mohr Davidow Ventures. “She really trained us on how bad we were,” Immelt said.
Part of the key for corporate venture funds is having a leadership team that comes from the venture capital world and knows how to work with startups, Immelt said.
—Jeff Immelt, the VC? President Immelt?: Immelt was reportedly a finalist for the Uber CEO job over the summer, but he withdrew his name from consideration in the final stages of the hiring search, and the company chose Expedia CEO Dara Khosrowshahi.
Now, might Immelt become a venture investor instead?
He didn’t give a straight answer when Geary asked, but it sounds like he’s interested in getting involved with tech startups in some fashion. He spent 35 years at an industrial behemoth, where one of the fears is that a small upstart might disrupt your business with new technology. Now, he said he’s ready to sit on the other side of the table.
“I like building companies,” he said. “In some way, shape, or form, where I’d like to go is work with growth companies.”
Geary suggested another path for Immelt. “My 90-year-old mother is a big fan of yours, [and] thinks you should run for president, which is maybe not that far off, given what’s happened in the last year,” he said.
Immelt, a self-described Republican, mentioned earlier in the conversation that he didn’t vote in the 2016 presidential election of businessman Donald Trump. But Immelt laughed at the idea of taking a run at the White House. “Tell your mother that I think she’s crazy,” he said.