Dive Brief:
-
General Electric (GE) is publicly discussing breaking up the conglomerate, which could impact healthcare.
-
After losing more than $11 billion from its long-term care portfolio and through changes to the tax code, CEO John Flannery said the company is exploring ways to cut $3.5 billion, including potentially thousands of job cuts and divestitures.
-
In November, Flannery said the company planned to focus on three core units: aviation, power and healthcare, but was also reportedly looking to shed its health IT business. Now, the major American business is talking about a major breakup.
Dive Insight:
GE employs approximately 300,000 people and has business in multiple sectors, including power, healthcare, energy and aviation. There are about 54,000 GE employees connected to healthcare.
During an investor webcast on Tuesday, Flannery said he’s “disappointed” in GE’s legacy portfolio and the company is making “profound changes to the company.” However, Flannery also promoted the company’s “underlying strengths and value” and added that the company is looking at the best structure or structures for its portfolio.
"Our results over the past several years including 2017 and the insurance change only further my belief that we need to continue to move with purpose to reshape GE,” Flannery said.
Clearly, given its CEO's comments today, $GE has started down the road to breaking itself up and people close to the company tell me that outcome is likely with an announcement possible as soon as this Spring.
— David Faber (@davidfaber) January 16, 2018
The latest news follows reports in October that GE was looking to divest its healthcare IT business as the company sought to reshape its portfolio and drop more than $20 billion in assets. GE’s health IT offerings include API Healthcare and Centricity EMR. At the time, GE was also looking to sell its transportation business.
Now, three months later, the talks are for something bigger. The likely breakup of GE would have been impossible to think decades ago when GE was a major industrial power. However, even with the burgeoning economy, GE is still losing billions.
No matter what GE decides, a breakup would likely affect healthcare. Healthcare is GE’s second largest division of labor.