InteliHealth, a 3-year-old Internet healthcare company backed by the unlikely combination of Aetna U.S. Healthcare and Johns Hopkins University and its three-hospital health system, is out to capture the eyeballs, minds and pocketbooks of healthcare consumers.
While chatter about how the Internet will transform healthcare is practically deafening, few of the ideas touted for delivering information, products and services electronically can show results.
Among those that can is InteliHealth. In the infant Internet industry, the company is a graybeard that has waited until now to begin telling its story.
Launched to provide health information to consumers, the venture got off the ground with a $25 million line of credit from managed-care giant Aetna U.S. Healthcare, which remains the majority owner and has majority control, and the brainpower of Johns Hopkins. Several private investors have minority stakes.
"We did it all in secret," said Bob Pringle, president of Blue Bell, Pa.-based InteliHealth. Aetna U.S. Healthcare, also based in Blue Bell, and Baltimore-based Johns Hopkins "won't tolerate failure, and they don't want to tarnish their brands," he explained.
Hospitals and managed-care companies seem unable to agree on much these days, but Aetna and Johns Hopkins plunged into the InteliHealth venture together to burnish their respective brands via the Internet, reach consumers nationally and pick up a little cash along the way.
Beyond maintaining its World Wide Web site, at www.intelihealth.com, InteliHealth licenses its content elsewhere on the Internet-for 419 sites at last count, including scores operated by television stations and newspapers. A companion service geared to healthcare professionals, including administrators, can be found at http: ipn.intelihealth.com.
Late last month, InteliHealth headlined an investment conference devoted to healthcare electronic commerce and sponsored by ING Barings, a New York investment bank. Privately held and in no rush to go public, according to Pringle, the company nonetheless was eager to show Wall Street an Internet business model that's working. InteliHealth doesn't release financial results. But Pringle said annual revenues are in the "tens of millions," though still short of turning a profit.
The mania for all things Internet makes predicting the long-term success of companies such as InteliHealth more art than science.
But in January, 671,000 people visited InteliHealth's Web site, according to data from Media Metrix, an Internet rating firm. That places the site among the top two or three healthcare destinations on the Web.
Despite a lack of profits so far, InteliHealth's revenues-derived from advertising, licensing and catalog sales-bode well.
"The vast majority of consumer Internet companies are not profitable, and the markets haven't punished them for that," said David Restrepo, healthcare analyst for Jupiter Communications, a New York-based Internet market research firm. "Right now, companies are being valued on revenues rather than profitability."
So the smart Internet companies, he said, are spending money to establish brands and powerful market positions for the future. "I would advise (InteliHealth) to create market share and not be worried about profits in the short term."
With the Johns Hopkins name leading the way, InteliHealth has "considerable advantages" over lesser-known competitors, Restrepo said. Johns Hopkins faces stiff competition from another marquee medical center, Mayo Clinic, whose health site at www.mayohealth.org is also popular.
The payoff for the leading health Web sites is likely to come soon, as drug companies move a big chunk of their direct-to-consumer advertising to the Internet, Restrepo said. During the first nine months of 1998, drug companies spent about $7 million on on-line ads, but by 2002 the figure is likely to top $265 million, he said. The Web offers a big advantage to pharmaceutical firms: Their ads for a particular drug can be placed on the pages that deal with related diseases.
"We see sites like InteliHealth and some of its peers as well positioned to capture some of that (ad spending)," Restrepo said.
Johns Hopkins is already reaping rewards.
The venerable health system signed a 10-year contract to provide content and to extend its name to the venture. In return, Johns Hopkins receives fees for preparing and vetting editorial material, annual royalties and an undisclosed minority equity stake, which could prove valuable if InteliHealth is sold or offers shares to the public. And that's a strong possibility given Wall Street's appetite for Internet initial public offerings.
InteliHealth is "an ideal way to build on our historic base in print publishing," said Ron Sauder, director of the office of consumer health information for the university and the system.
More than 10 years ago, Johns Hopkins plunged into the consumer information business, anchored by a health newsletter for consumers over age 50. The publication now claims more than 500,000 subscribers.
InteliHealth's content has made headlines, winning the Internet's version of the Oscar, called the Webby, earlier this month. Meanwhile, its old-fashioned mail-order business for health products makes money, turning an undisclosed profit in its first year of operation.
Big sellers? "Anything from the waist down really works," Pringle said, citing consumers' embarrassment at buying such products as adult diapers in person.