February 16, 2000
ACQUIRE CARE INSITE AND MEDICAL MANAGER -- GOOD NEWS FOR ADVANCING
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
Mostly it's very good news.
Why? It avoids a major battle over
Internet health connectivity standards (software and user
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
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
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
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?"
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