Healtheon and WebMD last week said they are joining their considerable forces to entice their way into doctor offices and hospital systems via the Internet.
The news of Santa Clara, Calif.-based Healtheon's stock-financed offer to buy Atlanta-based WebMD launched a run on Healtheon stock, nearly doubling the deal's value to $10.3 billion at close of trading Friday from $5.5 billion on Tuesday.
No date had been set for completion of the deal.
Even before merging, the two startup companies were focused on mobilizing their product in provider sites before competitors can react, said Mike Long, Healtheon's chief executive officer.
That means enrolling thousands of physicians, demonstrating benefits and penetrating the market first, said Long. With speed of penetration and scale of enrollment the critical factors, Healtheon-WebMD's first move will be to lessen the cost of the service.
It assembled a $330 million subsidy from investors Microsoft Corp. and DuPont to allow hundreds of thousands of doctors to receive the service for free.
The WebMD service now costs $30 a month, but the merged companies' bankroll is large enough that 200,000 of the nation's 650,000 physicians could receive the service free for five years, long enough to hook them on the product.
WebMD's Internet-based service attempts to package all the communication needs of physicians in one place, from electronic billing and telecommunications management to medical research and the ability to send and receive patients' test results (Oct. 5, 1998, p. 34).
Since its launch six months ago, only 5,000 physicians have been connected but 54,000 subscriptions have been sold, said Jeffrey Arnold, WebMD's CEO.
Healtheon, which is developing medical communications networks, has contracts with UnitedHealth Group and SmithKline Beecham Clinical Laboratories. Long said WebMD's marketers will concentrate on the 180,000 physicians served by those two Healtheon customers.