Like merchants clogging a town square at a Saturday market, purveyors of Internet "portals" have pitched their eye-catching tents smack in the middle of the healthcare industry, hawking wares they say hospitals and doctors can't do without.
The bigger and more prosperous-looking entrepreneurships, with names like Healtheon/WebMD and CareInsite branded on their wares, display a comprehensive line of electronic inventions aimed at fulfilling a range of needs -- they call it their "end-to-end solution." Competing for attention are other vendors in smaller booths, all set up to argue that they can offer most of the same services better than the big brands.
Tapping people on the shoulder among the crowd are new entrants, each equipped with little but a backpack, some private financial support and a speech about a product they say is a great complement to what the tented merchants are selling.
Meanwhile, more Internet vendors pour into the marketplace all the time -- the barrier to entry is barely knee-high.
For executives of healthcare organizations, the bazaar atmosphere is bizarre. The endless hype about Internet-based innovation adds to the pressure of understanding the new technology's significance and how it can be used to resolve operational and strategic issues, industry observers say.
To complicate matters, the companies soliciting healthcare's business are revising their service lines continually and striking partnerships with other companies that are similarly in flux. It's hard to know for sure what a vendor has to sell or how far along in development the advertised features really are, says Stephen O'Dell, managing director of e-health at First Consulting Group, a Long Beach, Calif.-based healthcare information technology consulting firm. "It's pretty much all coming together, and that's what breeds some of the confusion," O'Dell says.
The payoff for sorting through the confusion could be substantial, experts proclaim. As chronicled throughout this issue of Eye on Info, healthcare-oriented World Wide Web sites and Internet-style information systems have the potential to bring providers closer to patients and payers, put an end to the paperwork logjam and trim the costs of communication in ways not possible a few years ago.
But some observers and early-bird patrons at the bazaar are cautioning that one-stop shopping as encouraged by portal merchants isn't necessarily the way to go. Instead of picking a portal by comparing packages, providers might do well to look first at their main needs and priorities and then shop selectively for the best services available in the market, says Michael Kreitzer, Chicago-based managing director of healthcare information consulting with American Express Tax and Business Services.
"The industry is too new. If you go with one portal, you're taking on too much risk in this infancy stage," Kreitzer says. The better choice may be to fashion a mix of services from several vendors into a custom hub that adeptly matches the requirements of a provider organization and avoids paying for services that aren't needed or don't measure up, he says.
Getting organized. Internet portals started out as responses to the practical problems of searching the Web for specific information and services, experts say.
Thousands of Web-site operators depended on expensive marketing and luck to get their Web addresses included among the many that had to be entered individually by people seeking Internet materials. Web surfers found the process of visiting sites to be time-consuming and difficult because of all the choices available -- or yet undiscovered -- and the bother of managing all the Web addresses.
If access to a preferred set of Web sites could be consolidated at one destination serving the same needs of large groups, it would benefit both Web ventures and users. Such an aggregation of sites has come to be known as a portal.
In the health field, portal sites such as WebMD, Medscape and drkoop.com sprang up to contract for and compose "content" -- online information, research findings and Web links to explore other sites. To set themselves apart from the clutter of Web sites, the portals spent millions of dollars to increase their exposure and create a familiar "brand" name for consumers.
But in less than two years, the relative ease of entering the business and the rush to get in on the action have turned health information into something of a commodity, says Peter Kilbridge, M.D., director of emerging practices with the Boston office of First Consulting Group.
"There are more content sites out there than there are people to use them," says Kilbridge. "There's no differentiation left out there. The market is pretty saturated."
Expansion project. In the past year, however, the scope of portals has expanded greatly as the full extent of Internet technology's breakthrough capability has become evident. Besides organizing content from many sources, Web browsers have provided the power to automate transactions, integrate incompatible computer systems and create new vehicles enabling clinical professionals to interact.
Portals in turn have enlarged their roster of services -- either by creating services themselves or assembling them via partnerships -- to keep pace with the expanding working definition of a healthcare portal (See chart, p. 25).
Coaxed by Wall Street's abiding belief in portals as the healthcare model of the future, entrepreneurs are taking their cues less from the consumer health movement and more from the provider community's need to squeeze efficiency out of their operations through advances in transaction and communication technology. "Connectivity" has replaced content as the main draw.
"Connectivity (is) the single greatest near-term business opportunity in the healthcare Internet industry," heralds James Kumpel, a healthcare analyst with Raymond James Associates of St. Petersburg, Fla., in a research report last November. "The reason for this is that the workflow among various healthcare participants is currently so convoluted, time-consuming and paper-intensive that administration comprises nearly $200 billion annually," Kumpel says. "Increased use of electronic solutions and communications devices via the Web is the means to address this issue."
The 1999 merger of Atlanta-based WebMD and Santa Clara, Calif.-based Healtheon Corp., along with assorted acquisitions, partnerships and licensing, has spawned a company with a strategy to cover all the connectivity bases and the comprehensive lineup of services to go with it. The well-publicized vision of an "end-to-end solution" across the spectrum of providers, payers and consumers has been a magnet for investment and additional alliance-building, attracting billions of dollars from companies and capitalists hungry for a healthcare stake.
"The company has an ambitious strategy that includes establishing Healtheon as the No. 1 brand on the Web, aggregating consumers and physicians, creating a portal site with the most reliable information and connecting providers clinically and financially so claims can be paid and information shared through the Internet," says Bruce Hochstadt, M.D., a healthcare analyst with Thomas Weisel Partners of San Francisco.
The key to Healtheon/WebMD's success will be to initially attract physicians and hospitals with its content offering and ultimately act as the vehicle for facilitating transactions among providers, Hochstadt says.
Competitors have launched acquisition and partnership binges of their own to match Healtheon/WebMD's range of services. For example, another Wall Street favorite, CareInsite of Elmwood Park, N.J., struck an exclusive brand-burnishing arrangement with America Online and recently purchased an Internet network, part-owned by the Greater New York Hospital Association, serving hospitals and payers throughout the New York metropolitan area.
Your portal or mine? Healtheon/WebMD's all-encompassing plan of action relies on two assumptions, observers note. First, providers will be willing to carry the portal's brand into their communities as the tradeoff for valuable services. Second, the mix of services provided will square with what providers need most.
Such a plan fails to recognize the essence of healthcare as a local business with a stake in promoting hospital and medical-group name recognition, says John Eudes, president of Greystone.net, an Atlanta-based healthcare Internet strategic planning firm. "It's not a cottage industry by accident," Eudes says, adding that local healthcare organizations are not going to cede their brand recognition to national portal companies.
For example, Sharp HealthCare, a six-hospital system based in San Diego, revised and relaunched its Web site last September in a blitz that included packaging introductory CD-ROM tutorials with a Sunday San Diego Union Tribune delivery to 323,000 households. It was Sharp's opening offensive in a bid to claim home turf against the likes of Healtheon/WebMD and other portal companies.
And Health Alliance of Greater Cincinnati, a five-hospital system, recently beefed up its Web site by launching a feature called Anatomy Explorer through a partnership with the Health Network, a consumer health site, to educate patients who've been diagnosed with an illness.
Health Alliance also plans to create interactive health assessments and quizzes, in-depth disease information and online class registration. The site, which already had a following thanks to such varied features as pictures of newborns and job postings, won the 1999 Best Health Care Service Web Site award presented by the Web Marketing Association.
As for connectivity services, Healtheon/
WebMD's competitors are playing up what they insist is their head start in developing comprehensive regional networks. "It's much easier to acquire content than it is to build connectivity," says Jack Guinan, president of ProxyMed, a Fort Lauderdale, Fla.-based physician-office transaction service that's creating its own portal.
The centerpiece is a 6-year-old electronic network, "which took tens of millions of dollars and, most importantly, time" to build, Guinan says. The company processed 70 million transactions last year between 50,000 physicians and a network that included 30,000 pharmacies, 1,800 clinical labs and 700 payer organizations, he says. The private electronic network is being ported to the ProxyMed Internet site along with new content and e-commerce offerings.
Other healthcare portal ventures are similarly contracting for the services they need to be considered comprehensive, while nurturing the services they specialized in when they entered the Internet market.
For example, Seattle-based Pointshare Online Healthcare Solutions has built transaction networks to community specifications in the Northwest, and it eventually wants to expand to markets across the country, says Timothy Kilgallon, president and chief executive officer. Pointshare is also adding links to Medscape for physician-oriented content and to other sources of physician and patient education.
Cybear, a portal company based in Boca Raton, Fla., had concentrated on building secure online communication and transaction services for physician practices, says Andrew Ripps, executive vice president for marketing and product management. Last month it announced several deals to expand its range of services, including a partnership that will add electronic connections to laboratories.
Although Cybear has formed a partnership with Cox Communications to supply content to the portal, "we're focused on communications and commerce," Ripps says. "People haven't figured out how to make money on content, and I think it'll be a long time before someone does."
Decisions, decisions. Baylor Health Care System, an early proponent of Internet-based communications approaches, found in Healtheon a fellow traveler and innovator worth working with (Modern Healthcare, Aug. 9, 1999, p. 52). Dallas-based Baylor piloted Healtheon's managed-care transaction network before the merger with WebMD. However, the provider network is treading cautiously in subscribing to Healtheon/WebMD's services for its 5,000 physicians on staff, says Robert Pickton, Baylor's senior vice president and chief information officer.
A get-it-all subscription is not in the cards yet; in fact, Baylor is only inching into the first few services, dissatisfied thus far by the progress the vendor has made in the Dallas area. "They're still very immature in our market," Pickton says.
Healtheon has been acquiring components of a national network for verifying patient insurance coverage, and early feedback from doctors showed strong interest in online eligibility verification. But for such a service to be practical, it must have interactive payer connections to handle at least 70% of a physician practice's insured patients, he says.
One medical group with a dozen physicians pilot-tested the service last year, and it had the mix of insured patients that corresponded closely enough with Healtheon's available connections to reach the 70% mark and make it worthwhile. But few practices enjoy a similar situation, Pickton says.
In addition, Baylor executives found that in daily practice, the eligibility feature alone wasn't enough to retain the focus of physicians and get them to use the Internet option every day. Confirmation of current insurance carrier was "sort of nice to have," Pickton says, but it was not enough without the added ability to confirm authorization for and restrictions on specific treatments and procedures.
For example, can a patient be admitted, or does the procedure have to be done on an outpatient basis? Will insurance pay for four days, or only two? Those are examples of where the lack of information was most likely to result in reimbursement problems, and doctors' offices still had to resolve those issues by phone and fax, he says. Another simple but important managed-care aid involved the patient's share of the bill. Has the deductible been met? Should a doctor's office collect a copayment before a patient is seen?
An Internet-based network for physicians has to have a draw that lures them to use it daily, so Baylor as corporate underwriter can get their attention and make the network a vehicle for e-mail and other communication with physician offices, Pickton says.
Baylor has yet to hammer out a contract with Healtheon, though Pickton says top executives "look forward to cementing the arrangement around tangible business needs." Specific services will be ordered "when they're the right services for us," but not until they demonstrate the efficiency and improved productivity that justify subscription fees, extra computers and phone lines, Pickton says. But he adds: "The promise is clearly there."
Before jumping into an arrangement with a portal vendor, says consultant Kreitzer, healthcare organizations first should isolate their business objectives, categorize their information needs and identify the technology required to meet those needs. "Focus on picking vendors who understand your business issues and can talk that through," he says. And yes, it can involve multiple vendors -- in fact, it probably should, he adds.
At the intersection of healthcare delivery and Internet technology is a set of design issues so varied and complex that the likelihood of being able to solve all of them with one vendor is nearly impossible, Kreitzer says. The list of essential operations that can benefit from a technology assist run the gamut from simple patient information queries to complex delving for clinical information to help a physician make an informed diagnosis.
Within a hospital, for example, different types of creativity are required in a service that combines and displays supply-company offerings compared with an interactive surgical application. Considering the very different foundations of expertise required by a company designing and supplying each of those services, "those could and should be two different vendors," he says.
The type of provider or third-party partner participating in a communications exchange also is a key consideration in a decision on whether a vendor is cut out for the job, Kreitzer says. Different approaches are called for depending on whether the Internet service is targeted at other hospitals, physicians, home medical equipment distributors, other links in the chain of care, or consumers.
Taking charge. That doesn't mean all-inclusive portals are a bad decision. They're just not the only decision, says O'Dell of First Consulting. "It's very early in the game, and people are just figuring out that they can build with pieces," he says.
The same simplicity that has allowed portal companies to aggregate many resources and services also allows determined provider organizations to organize their own portal based on the best offerings in the marketplace for a particular use.
For example, a portal can start with licensed content for consumers, followed by connections to content aimed at physicians. That leads to a search for the best-available connectivity services. E-commerce and supply-chain data exchanges, meanwhile, are built on a much different technology model and should be a separate path, O'Dell says.
Some portal vendors acknowledge the prospect of being part of a fit-together strategy rather than the source of all services. "I don't know if everyone can offer all the content and services available," says ProxyMed's Guinan. If one portal had more and better content than ProxyMed could supply, but had weaker physician connectivity, ProxyMed might work with the competitor to round out a full roster of services for a customer, Guinan says.
When a provider does decide to ink a contract, it should take into consideration both the pace of change in the portal industry and the conflicting business objectives of portal companies, experts say.
Internet companies are spending billions of dollars in a pitched battle for visibility and market share, as the high-priced slew of Super Bowl ads demonstrated late last month. The execution of that objective involves locking up customers for as long as possible and committing them long-term to a company's product and service development, Kreitzer says.
But in healthcare, that runs counter to a customer's objective of maximum service at the least risk with the greatest latitude for developing a base of patients, he says.
Selecting information systems vendors was once a long-term commitment because software and support systems were built nearly inextricably into an organization. The state of technology made it difficult and costly for providers to switch vendors or handpick the best available system for each business or clinical process, Kreitzer says.
Not anymore. The flip side of an Internet-based vendor's ability to install services quickly and easily is the same ability of the provider customer to switch to another vendor, says Kilbridge of First Consulting. "The barriers to entry are low technologically," Kilbridge says. By the same token, the "cost of switching is not enough to lock people in for the next 10 years."
That should put providers, not portal vendors, in the driver's seat with an exit option if a company gets into financial trouble or doesn't deliver as anticipated, O'Dell says.
Initial steps. One way to jump into the portal era with both feet is to decide on a prime vendor to execute an organization's prime objective and then fill in the rest of the functions over time, Kreitzer says.
That's the tack taken by Adirondack Medicine, an IPA of 400 physicians with offices spread throughout upstate New York. The Glens Falls-based organization is implementing Cybear's secure portal, which links the physicians while setting up each physician office with its own Web site, says Adirondack Administrator Lorrie Matyka. The project began last year in mid-March.
"Our goal was always to find a way to communicate to our physicians as well as pull in labs and pharmacies," she says. "We really wanted a community."
Adirondack wanted to eliminate the costs and imprecision of relying on mail and faxes, but the most important priority was a secure intranet. Cybear showed it could develop one using a "tunneling technology," which cuts a private path through the public Internet, in combination with a secured Internet service connection, she says.
A simple template helps doctors create a personalized Web site; the only upfront expense was the cost of upgrading a low-powered version of a Web browser in a few offices, Matyka says. The IPA is providing the service for the monthly fee of $24.95 per physician, which isn't much more than a generic Internet connection service would cost, she says.
In New York City, another Cybear intranet has been in operation since last September serving nearly 2,000 physicians of Benchmark IPA. The physician organization manages risk contracts representing 70,000 capitated enrollees for Continuum Health Partners, a hospital network comprising Beth Israel Medical Center, Long Island College Hospital, New York Eye and Ear Infirmary, and St. Luke's-Roosevelt Hospital Center.
Benchmark is working through the same challenge as Baylor, that of getting physicians to use the intranet routinely, says Michael Dean, M.D., the IPA's president and CEO. "It's not necessarily true that if you build it, they will come," he says.
The organization is working with Cybear and with ParkStone Medical Information Systems, a vendor of formulary and referral information via palmtop computers, to help overcome the hurdles to getting physicians to use the network (Modern Healthcare, Sept. 13, 1999, p. 22). Once the IPA can make the portable technology useful enough that "doctors will go nowhere without it," the information network will be employed as the main means of communicating with physicians, Dean says.
Adirondack also has grand plans for a comprehensive physician services lineup that includes transfer of information into the Web site from hospitals, ancillary facilities and payers, Matyka says.
The steady addition of services for existing customers could become a fundamental job of portal companies, giving the technology providers a responsibility for managing innovation in addition to their principal function of delivering targeted features to customers, Guinan says.
With so many new entrants to the Internet-technology bazaar, it's hard for healthcare to keep up. At the same time, portals have to protect their value to customers by deftly sorting through companies offering a particular Internet-based service, judging the winners and acting as a conduit for business enhancements, he says.