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E-business Watch
Tracking the
online media to bring you the key e-business trends
March
8, 2000
Prescriptions
for the health-care sector
While the Internet is transforming all areas of
the economy, the health care sector stands out as particularly ripe for change.
In its simplest form, the Internet has become a
powerful tool for individuals seeking health-care information and advice. A
recent Jupiter
Communications survey found that nearly half of all Web users have searched
for health information. Sites such as onhealth.com,
drkoop.com and allhealth.com
provide personalized health tools, access to the latest news and information on
health problems, treatment and drugs, as well as opportunities to discuss shared
health concerns with others. Access to these resources empowers
individuals, allowing them to learn more about health-related issues and take
greater control over their own well-being.
On the horizon, emerging
technologies promise to further revolutionize clinical practices and the
doctor/patient relationship. Advances in wireless technologies will give
healthcare practitioners easier access to records and diagnostic tools, while
widespread broadband access will bring telemedicine into the mainstream.
Right now, however, the largest impact of the
Internet can be found in efforts to link
together the many diverse players involved in the United States' $1 trillion
health-care
sector. Making connections between doctors, hospitals, insurers, pharmaceutical
companies, and suppliers of medical equipment – the business-to-business
component of health – is
projected to reach $348 billion in the United States by 2004.
Presently, each of the 30
billion health-care transactions processed annually in the United States by
fax, phone or paper cost between $8 to $10. This cost drops to around 25 cents
when transactions are processed electronically, representing savings of more
than $230 billion annually.
Moving the supply chain online
A crucial component in streamlining the
health-care system lies in managing the incredible volume of paperwork, such as
medical records, prescriptions, test results, and insurance claims, generated by
doctors and hospitals. Presently, there are few mechanisms for tracking these
documents, resulting in duplication of records, misplaced lab tests,
unidentified drug interactions, and scores of other problems. Not only do
these inefficiencies cost money, they also endanger patients. Industry
reports estimate that that two out of every 100 people admitted to U.S.
hospitals experience preventable drug interactions, resulting in more than
140,000 deaths annually.
As in other sectors, such as automotive, steel
and energy, moving the health-care sector’s complex
supply chain online will create dramatic cost savings and improve the
overall efficiency of its players. Hospital purchases flow through a
complex and archaic chain of distributors, suppliers and manufacturers.
For the approximately 6,000 hospitals and 22,000 manufacturers and distributors
participating across the health-care supply chain, streamlining this process
will create billions in cost savings.
Companies such as Broadlane
and empactHealth see this as a golden
opportunity. Broadlane, a joint venture of Tenet Healthcare Corporation
and Ventro Corporation (formerly known as Chemdex), offers everything from
pharmaceuticals and X-ray film to heart valves and surgical instruments on its
site. It also provide tools for managing purchases, up-to-date technical
information, and other value-added services for buyers and suppliers. Similarly,
EmpactHealth uses technology developed by Commerce One to deliver “web-based
procurement solutions” that integrate health-care buyers and suppliers.
Leading the way
Rising above the competition in the race to build
connections between doctors, insurance companies and patients is
Healtheon/WebMD. Founded by Internet-veteran Jim Clark, Healtheon/WebMD
has rapidly become the “900-pound
gorilla in Internet health care.” In the last few weeks, it has used
over $5 billion of its stock to acquire
three leading competitors, Careinsite, the OnHealth Network and Envoy
Corporation. Over the last 18 months, it has completed more than 80 deals,
acquiring companies in all areas of Internet health care and moving quickly
toward its vision of
becoming “the first end-to-end Internet health-care company connecting
physicians and consumers to each other and to the entire health-care
community.”
With its recent acquisitions, Healtheon/WebMD is
quickly moving toward its goal of becoming the single environment for all
health-related communications and transactions on the Internet. According
to the New
York Times, company executives expect to make connections between 400,000
doctors, 900 insurance companies 46,000 pharmacies and 4,500 hospitals by June
of this year. The
San Jose Mercury News estimates that the company already has access, in some
form, to 80% of all physicians in the U.S.
Hurdles to overcome
Creating these linkages in the
health care system will not be an easy task. Major concerns over privacy
issues and the disclosure of sensitive medical information still need to be
resolved. In fact, the U.S. Federal Trade Commission is currently
investigating alleged breaches of privacy by some health information
websites that have reportedly shared consumers’ personal information with
other companies, without consent. The Los
Angeles Times recently noted that a recent survey found that "42% of
those polled would not give a doctor online access to their medical records and
25% would not refill a prescription over the Internet."
Despite these concerns, there is no doubt that
the new technologies and the Internet will continue revolutionize the provision
of health care in North America.
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