MedicaLogic hopes to do in the online clinical world what Healtheon/WebMD is attempting in providers' back offices.
Its goal: create a more efficient--and paperless--medical marketplace through the use of electronic medical records.
Hillsboro, Ore.-based MedicaLogic was founded by Mark Leavitt, M.D., almost 15 years ago. The company's original software product, Logician Enterprise, is a server-based product that creates electronic records for hospitals and large group practices.
The high cost of hardware and software, however, has kept EMRs out of reach of small group practices until recently. MedicaLogic is now shifting its focus to the Web and hoping to capture the physician market with Logician Internet.
The new EMR system can be downloaded and accessed using a physician's PC and lets physicians manage and store medical records on the Internet. Logician Internet is available on a subscription basis for $99 a month. Leavitt dismisses arguments that physicians are technophobic.
"That's baloney. They adopted CT scans. They adopt things they see improving patient care, and they adopt right away," he says. "For physicians, it's really an issue of cost vs. benefits. Before the Internet, the cost was $25,000 per doctor to put in an EMR system. With the Internet, we can drive out most of the cost because all of the infrastructure can be common."
Leavitt expanded MedicaLogic's reach into physician's offices in February when it announced a merger with New York-based Medscape, a health information site.
The $720 million stock deal will give MedicaLogic access to Medscape's 1.7 million members, 280,000 of whom are physicians. As part of the same deal, MedicaLogic also acquired Total eMed, a Web-based medical dictation company.
With about 8,000 physicians currently using MedicaLogic to maintain more than 8 million patient records, the company dominates the small EMR world.
MedicaLogic's primary competition is Web-based charting companies like Mountain View, Calif.-based iMedica and other EMR companies like Madison, Wis.-based Epic Systems.
Since MedicaLogic went public last December, its stock has fluctuated between a high of $54 when the Medscape deal was announced and a current low of $13.
Affecting MedicaLogic's stock price was the announcement in February that the company's 1999 revenues were $19.7 million and year-end losses were $22 million.
Although MedicaLogic is the leader in EMRs, the company is far from being in the financial clear, says Mike Davis, a research director with the Denver-based Gartner Group.
"Both (MedicaLogic and Medscape) are a long way from being profitable. When they merge, what do you really come up with? Medscape has done a fairly good job of the business-to-consumer stuff with physicians, but MedicaLogic has struggled to penetrate the market with their EMR product," he says. In order to be successful, he says, MedicaLogic will need to create a revenue base, not unlike Healtheon's reliance on transaction fees.
Leavitt, however, says he believes MedicaLogic will appeal to physicians because of its focus on the clinical side of practice. Leavitt is content to watch Healtheon/WebMD continue its march across the healthcare landscape because he sees the two companies' visions as very different.
"Our goal isn't to buy up everything else and declare ourselves Microsoft," he says. "Our goal is to focus on physicians and the patient clinical process, not the back end. We're all about the chart, not the bill transaction and the health plan," he says. "Physicians are much more excited about what will improve the quality of care."