A not-for-profit contender could present the stiffest challenge to two entrepreneurial Internet companies that charged into the wide-open field of healthcare electronic commerce aiming to beat other profit-minded entrants to the physician desktop.
Healthcare alliance VHA this week will launch an Internet-based package of services to help physicians improve business and clinical performance, increase access to medical research and connect with their peers.
The World Wide Web site, dubbed PhysicianLink Online, also will deliver medical information to consumers, a separate service VHA has been grooming for more than a year.
Healtheon Corp. and WebMD are promoting the same types of services in their bid to be the first to organize, consolidate and provide for the information needs of physicians and their patients (May 24, p. 4).
But while those two companies develop strategies to gain "first-mover advantage" in claiming new markets, executives of VHA's 4-year-old healthcare information technology division say they're already positioned to quickly connect the 25% of the healthcare provider market represented by the Irving, Texas-based alliance.
Though VHA sees physician participation as a key in the competitive battle, the alliance is pursuing a lofty not-for-profit goal beyond collecting paid subscriptions, says Rick Ratliff, vice president of the VHA healthcare information technology unit.
VHA's ultimate purpose, he says, is to preserve and enhance the standing of the nation's hospitals as preferred health and wellness providers in their communities.
VHA's newest information service builds on an Internet network already serving 35,000 clinicians and other healthcare workers. That Internet capability was launched the same day WebMD announced its formation (Oct. 5, 1998, pages 34 and 60).
A base set of services, such as claims processing and access to online product catalogs and sources of medical education and information, will be offered for free to the 1,800 healthcare organizations that belong to VHA.
For a fee, VHA members can tap other administrative services such as practice management systems and managed-care information systems.
In addition, physicians on staff at participating hospitals can gain access to laboratory and radiology test results through links between Web sites and hospital information systems, Ratliff says.
Once physicians are connected to the Internet service, they can extend their relationships with patients by hosting a link to Laurus, VHA's consumer-oriented medical information initiative, says Scott Decker, also vice president of the VHA healthcare information technology unit.
Ratliff says VHA's Internet enrollment of 35,000 is expected to increase to 60,000 by year-end. Fees for the network connection are based on VHA's costs and the volume of customer transactions over the VHA network, alliance officials say.
The connection to the Internet-based network, called VHAseCure.net, enables providers to receive the mix of services directed through the PhysicianLink portal.
The alliance's market encompasses 900,000 full-time-equivalent employees of healthcare facilities and more than 175,000 physicians associated with member organizations, Ratliff says.
David vs. Goliath. In development for 18 months, VHA's newest Internet initiative had been slated for a June 1 launch long before Atlanta-based WebMD and Santa Clara, Calif.-based Healtheon joined to offer similar services to the same audience.
The commercial challenge broadens VHA's competitive field beyond its traditional market-share tug-of-war with Premier, a San Diego-based healthcare alliance, which is battling VHA for not-for-profit healthcare organization membership.
VHA now has to contend with a fledgling but favored Wall Street darling whose combined market value has fluctuated between $10 billion and $20 billion. The proposed merger also is fortified by the capital and technological clout of Microsoft Corp., which will own 11% of Healtheon-WebMD and has committed $250 million to marketing and development.
What's more, WebMD has formed "strategic relationships" with Premier and another VHA nemesis, Tenet Healthcare Corp., the for-profit healthcare chain based in Santa Barbara, Calif.
WebMD has sold 54,000 subscriptions to its on-line portal, and through Healtheon's customer base has access to 1,000 hospitals, 180,000 physicians, 42,000 pharmacies and 10,000 dentists, says Jeffrey Arnold, WebMD's chief executive officer.
Meanwhile, VHA has attracted sponsorships from a half-dozen healthcare business partners: Abbott Laboratories, Baxter International, Eastman Kodak Co., Nycomed Amersham, Smith+Nephew and 3M Health Care. VHA declined to disclose the amount of backing except to say the total well exceeded $1 million.
The matchup puts VHA on the battlefield as David against an investor-reinforced Goliath. But VHA's information technology executives say they already know the healthcare terrain and have better aim.
Ratliff says the VHA initiative differs in several ways from Healtheon-WebMD and other commercial efforts to harness electronic healthcare commerce with Web technology.
Unlike offerings that emphasize technology and must round up useful healthcare content, VHA already has developed the content in areas such as clinical management and disease management. The alliance is using just enough technology to bring the information and services to providers, Ratliff says.
VHA also has been refining its delivery of those services for 18 months, first through an Internet-style private network launched when concerns about data security still impeded the acceptance of Web technology. "We've lived through all the trials and tribulations of building a large data center and network," Ratliff says.
With its focus now shifting to the easier and cheaper delivery of services via the World Wide Web itself, VHA can focus on helping customers with healthcare business problems instead of technology, he says.
And healthcare systems likely will take the lead in subsidizing some of the enhancements that will benefit their physicians, Decker says.
Bringing the message home. Memorial Hermann Healthcare System in Houston is the first VHA member to customize the portal for its affiliated physicians by creating a Web-based connection to data, such as lab results and daily patient census, that are stored in the hospital system's computer applications.
"Our medical staff was somewhat skeptical at first about the ability of this kind of resource to meet their needs," says David Bradshaw, Memorial Hermann's chief information officer. But when physicians saw the features and customized response to their needs, they were "eager to move forward," he says.
The physician network, expected to be rolled out to the physician staff in June, also includes an on-line reference library, insurance claims processing and personalized feeds of financial, news and weather information to physicians' desktops.
VHA also has reached an agreement with Perot Systems Corp., a Dallas-based information systems company, to provide information technology systems to hospitals, especially smaller facilities, on a pay-per-use basis. Provider Network Solutions-the management services organization for Chester County Hospital Foundation in West Chester, Pa.-will be the first organization to use the delivery technology for physician practice management.
Compared with buying and managing such a system, the arrangement could save a provider organization as much as 50%, Ratliff says.
Other clinical initiatives include VHA's agreement with Philadelphia-based University of Pennsylvania Health System to share risk and revenues in a program to distribute the teaching and research institution's disease-management tools to member organizations, Ratliff says. The service also would include consulting to build programs using the disease-management protocols in return for an annual fee, he says.
Healtheon-WebMD is racing into some of the same service areas.
Early this year, Healtheon began extensive efforts at Baylor Health Care System in Dallas to deploy a medical "intranet," or private Internet-style network, for clinical, administrative and managed-care information and transactions.
Meanwhile, WebMD worked with Memorial Health System in Savannah, Ga., to create an Internet network allowing the system's 150 employed physicians to gain access to clinical test results from any Web browser. The healthcare system is now trying to sign up 220 more physicians in private practice, offering to pay the $30 monthly fee, says Scott Regan, Memorial's vice president of marketing and strategic planning.
The connections to the WebMD portal were possible because Memorial's key information systems already had been interfaced to a clinical Web browser application developed by the vendor, McKesson HBOC, Regan says.