Healtheon/WebMD last week shook up the Internet services terrain with a series of aggressive stock-financed moves to build its ballyhooed "end-to-end solution" for healthcare.
With earthquake force, followed by two aftershocks, the Atlanta-based purveyor of Internet information and transaction services cut deals to buy a major competitor for physician business, gain a foothold in the nation's largest market, acquire an existing electronic network in Massachusetts and swallow a prominent rival for online consumer information.
In rapid succession:
* Healtheon/WebMD agreed to acquire Medical Manager Corp. and its Internet subsidiary CareInsite for stock valued at $5.4 billion. The deal, scheduled to be complete by midyear, would unite Healtheon/
WebMD's ambitious national campaign of healthcare Internet network-building with CareInsite's focus on building Internet networks market by market. The union also would add healthcare heft to the leadership of the combined company (See chart).
* CareInsite announced it will purchase the assets of an electronic transaction processing network operated by Blue Cross and Blue Shield of Massachusetts, in a cash and stock deal worth $70 million. Until now, Elmwood Park, N.J.-based CareInsite has limited its efforts to the New York metropolitan area. The Massachusetts Blues network links more than 12,000 physicians to the insurer and other major payers.
* Healtheon/WebMD agreed to acquire OnHealth Network Co., a Seattle-based consumer health World Wide Web site, in a stock deal valued at $315 million.
The high-flying company now is in line to own or work exclusively with most of the major physician-practice information system vendors and can access hundreds of thousands of provider customers, said Steve Ditto, a Houston-based consultant with First Consulting Group, which specializes in healthcare information technology.
Last week's $6 billion buying spree followed $3 billion spent in January on electronic-message-handling capabilities. Now Healtheon/WebMD must fashion those pieces into the kind of comprehensive set of services it has been providing to 100,000 physician subscribers.
For now, the company's customers have to contend with a disconnect between the marketing pitch and the readiness of the services that were promised, Ditto said. "You'd think two years ago there was a legion of people from Healtheon that could come in and deliver everything tomorrow," he said. "And that's not true."
For example, six months after a New York physician-hospital organization signed a contract with Healtheon/WebMD, "the clock really hasn't started on our start-up," said Bruce Spivey, M.D., president and chief executive officer of the PHO, Columbia-Cornell Care. Much of the delay focuses on "getting clearer about the products available. The sales side and the deliverables side are not always identical," he said.
At St. Luke's Episcopal Health System in Houston, more than 700 of the 1,800 physicians on staff have signed up for $30-per-month subscriptions underwritten by Microsoft Corp., but subsequent support from Healtheon/WebMD has not matched the expertise demonstrated in signing and connecting doctors, said Cindy Jackson, project manager of physician information management.
"Their strategy is heading in the right direction. Whether they can pull it off in the magnitude they've envisioned, that remains to be seen," she said.