In response to Rebecca Vesely's "Reporter's notebook: Money woes don't slow Health 2.0":
Just because a thousand people attended a conference to socialize, kick tires and promote their wares does not mean Health 2.0 is here to stay or that the industry is undergoing a revolution (what happened to the eponymous company?). We have seen similar manias with dot-coms and regional health information organzations and everyone knows how long they lasted and how they ended. Irrational exuberance attracts a lot of onlookers.
The whole premise of the Health 2.0 model is based on the majority of consumers wanting to actively engage around health online. However, years of data demonstrate that this engagement mostly happens episodically and rarely goes beyond passive consumption of information. In other words, if Joe the Plumber gets sick, his most likely use of technology is to do a Google search followed by random browsing of the first few pages that pop upto figure out what is happening to him. He would be much less likely to take the next steps, such as post his own content or create a personal health record. PHR adoption numbers from Beth Israel Deaconess Medical Center tell us what we need to know. According to Chief Information Officer John Halamka, out of 40,000 patients with PHRs, only 42 patients have added any information to those files. That is why the number of 150 million consumers going online to look for health information is highly misleading. Consumers look but usually do not touch.
Freely available measurement services like Compete and Quantcast provide an accurate estimate of Web site traffic patterns, based on demographically adjusted panels. You need to look at total reach (number of visitors per month), engagement (number of pages per visit) and frequency (number of repeat visits per visitor) to deconstruct the hype behind these Health 2.0 properties. If you type in a few high-profile Health 2.0 company URLs and do back-of-the-envelope estimation of how much money they have to make per user to pay their expenses and turn a profit it is not hard to see why Health 2.0 is unlikely to provide higher-than-marginal return on investment. The story of Revolution Health, which went from the promise of turning the industry upside down to being a footnote in just three years shows how hard it is to monetize even when you have hundreds of millions in capital and manage to acquire millions of users.
Since the Health 2.0 concept is a derivative of Web 2.0, it is helpful to look at what is happening to the original. Investors and entrepreneurs in that space have already done the math and are retrenching in the face of a tanking economy. The venerable Sequoia Capital (backer of Google, Yahoo, PayPal and YouTube) stopped new Web 2.0 investments and issued a call to their companies to make deep cuts. It is becoming obvious that while Web 2.0 can supply many interesting Lego blocks (in the words of Kepa Zubeldia), it simply fails to generate enough cash. Given that the health technology marketplace follows the general technology industry with a little delay, it is not hard to predict what will happen next.
The Health 2.0 label will not disappear overnight. But watch for it being used to cover up deficiencies in products and business models, as well as to add excitement to established businesses, whose bread is buttered somewhere else. We have seen this movie with dot-coms.
Dmitriy KruglyakChief executive officerTrusted.MD NetworkSanta Clara, Calif.To submit a letter to YOUR VIEWS, click here. Please include your name, title, company and hometown.
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