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E-CareManagement News

February 16, 2000


The Richter scale shook again this week as Healtheon/WebMD announced an acquisition of CareInsite and Medical Manager. This mega-merger will bring together the #1 and #2 companies providing e-health connectivity. Details of the proposed deal can be reviewed at:

Healtheon to Buy Medical Manager

Healtheon-WebMD to CareInsite: "Be Mine!"

Online Health Firms Unite

Healtheon-WebMD Pops a Big Question

So what does the new HealtheonWebMD mean for those of us interested in disease management, care management, and clinical integration approaches?

Mostly it's very good news.

Why? It avoids a major battle over Internet health connectivity standards (software and user interface).

Most communication today in local health care delivery communities occurs through what will soon be viewed as primitive mechanisms: phone, fax, and mail. Optimal care/disease management processes are dependent upon getting many disparate players to work together as a team on a patient's behalf. These diverse players include doctors, hospitals, health plans, home health, case managers, social agencies, and the like.

Internet health connectivity can be viewed as a utility akin to telephone service or electricity. Imagine trying to advance disease management initiatives in a community where the doctors, hospitals and case managers had chosen one of two technologically incompatible telephone companies. Without this deal, that's just the prospect many communities would be facing -- two (or more) e-health connectivity companies battling to win the battle over a technology standard.

Just as it would be much easier to develop disease management services in a community when everyone is using the same phone company, it will be much easier to develop next generation DM services when everyone is communicating using the same Internet health connectivity standard (software and user interface). That's essentially what the new Healtheon/WebMD will provide.

So the less time we all spend battling over a standard for e-health connectivity, the more quickly we'll all be able to work on applying the Internet to where it can really make a difference: improving care for patients.
How much more quickly? This deal should speed up the pace of e-care applications by about two years, give or take.

"MOSTLY good news?" What's the qualifier?

It's clear that the new Healtheon/WebMD is a health care Microsoft in the making. Many people have a love/hate relationship with Microsoft. We love that we can exchange Word documents and Excel spreadsheets with just about everybody. We hate the monopoly power exerted by Microsoft in its pricing and its heavy handedness in quashing competitors.

Is the battle in e-health connectivity over?

One analyst quoted by the Industry Standard (referenced above) believes this deal ends the battle: "As far as I'm concerned, it's 'game over' in the connectivity space," says Caren Taylor, a health care analyst at E-Offering who follows CareInsite closely. "It will be very difficult for other companies to compete viably."

A different perspective is presented in the Sun Trust Equitable Securities e-Health Broswer, February 14, 2000: "Needless to say this transaction grabbed everyone's attention. However, as formidable as a company with $1.5 billion in cash, 'access' to over 400,000 physicians and 4,000 hospitals may sound, Healtheon/WebMD is expected to process only 2 billion of the 30 billion healthcare transactions for 2000. Consequently, we believe ample opportunity exists for those connectivity and business-to-business e-Health companies that can execute."

We'll offer a synthesis between these divergent viewpoints. What is clear is that this deal will greatly diminish competition in the e-health connectivity arena. While on a NATIONAL basis it's too early to declare a winner, this deal means that the battle will never be fought in many REGIONS. That is, the new HealtheonWebMD likely will be able to walk in to many communities without challenge, establish THE e-health connectivity standard, and life will go on.

One exception to watch is occurring in the Pacific Northwest and West, where Pointshare is achieving critical mass in providing e-health connectivity in a number of states.

Finally, "Is this a done deal?" There could be antitrust challenges, so it's not quite done. Some say that since the e-health industry is so new and undeveloped that a government challenge is unlikely. Others ask: "If the government doesn't challenge this 'health care Microsoft in the making', what will they challenge?"


ECMN now has 2,000 subscribers in over 26 countries worldwide. Thank you for helping ECMN grow by sharing issues with your colleagues!

E-CareManagement News is an e-newsletter that tracks a major change in health care and managed care—the paradigm shift from “managing cost” to “managing care”.  This e-newsletter is brought to you by Better Health Technologies, LLC (  BHT provides consulting and business development services relating to disease management, demand management, and patient health information technologies.

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