The Digital Pharmacy: Walgreens’ Emerging Strategy

The Walgreens PR team has been busy of late, announcing a spate ofDIGITAL RX partnerships that aim to transform them from a brick-and-mortar retail pharmacy into a digital one-stop shop for health care consumers. Specifically, three press releases in recent weeks have revealed a strategy that aims to leverage the 82 million “Balance Rewards” members by trading them store loyalty points for using various features from an expanding in-app menu.

First, Walgreens and WebMD have been collaborating for months on a partnership that brings WebMD tools (namely an online goal-setting/care coaching program) to the Walgreens website, and introduces Balance Rewards-based incentives for users of the WebMD app who are tracking fitness, nutrition, or other health data. It also introduces a refill feature to the WebMD app, so that users can order a refill or change pickup location after scanning the bar code on their empty Rx.

Second, Walgreens is working with Qualcomm in a similar fashion to link the usage of a specific set of devices (so far, two blood pressure cuffs and a blood glucose monitor) to members’ Balance Rewards account. This partnership was unveiled at the Health2.0 conference last fall – It will be housed in the Walgreens app at some point in “early 2015.”

Finally, late last year, Walgreens announced they will partner with MDLive, a leading virtual visit supplier, to give patients round-the-clock access to doctors through a smartphone camera-driven visit. This is available to customers in two states today (California and Michigan). Functionality-wise, this represents an expansion of a “pharmacist chat” feature that came out in the Walgreens app last year.

It’s a no-brainer that Walgreens is looking to incent people into coming to their stores. But their strategy to leverage wearables, at-home biometrics, virtual visits, and in-app tools is worth a closer look. The first two announcements above essentially provide people with coupons that they must earn – by monitoring a chronic disease, making progress against a weight loss plan, and so on. The MDLive partnership will likely route any prescriptions through Walgreens pharmacies, while building loyalty to the app and establishing brand credibility in the eyes of the time-pressed, convenience-seeking healthcare consumer.

These deals all appear to be win-wins for the companies involved at first, but real success for the healthcare system will hinge on consumers actually participating. And if we’ve seen one thing in digital health, it’s that if you build it, they’re not guaranteed to come.

More importantly, “success” needs to be defined here. Is more business and brand glad-handing by three publicly traded companies worth celebrating? Measuring outcomes and quantifying the public health impact of an undertaking of this scale will not be easy – nor do any of these three entities really have an obligation or incentive to do so publicly. Will rewards points lure people in to buy discounted soda and candy, or will this function as more of a health savings account (HSA) that only applies to healthcare items in-store?

And speaking of HSA, how will other stakeholders such as employer groups and payers get involved – is there a bigger role that WebMD can/will bring to the table? Walgreens embarked upon a handful of ACO partnerships in the last 18 months – will they be able to use these new mobile tools to add in a new layer of data about consumer preferences and behaviors (and take advantage of a new set of between-visit reimbursements by CMS)? Is there a strategic role for their partnership with Theranos in all of this? Will their partnership with Qualcomm just be another corporate co-branding PR play, as it appears to be today, or will they take a more device-agnostic approach moving forward that really enables their pharmacists to monitor populations, regardless of which device a patient is using?

All in all, while these partnerships need to play out and mature over the next couple of years, Walgreens is taking a bold, app-first step into the age of the digital pharmacy. This comes at an interesting time for the company, as they recently completed their acquisition of Alliance Boots, the European pharmaceutical wholesaler. As a result, Walgreens faces some questions about leadership of the new global corporation, and is in earnest cost-cutting mode. It remains to be seen if these recent announcements are aimed solely at ensuring their investors of a long-term strategy during this merger process. Perhaps their shift to digital-first entry points is aimed at reducing in-store overhead and improving overall operational efficiency for the long-term.

Either way, our take is that Walgreens has obtained a diverse set of pieces to enable them for long term success – but it remains up to them to execute. It’s too early to predict what will happen, but if these pieces align properly, Walgreens will be able to take advantage of the emerging age of the new healthcare consumer, for whom convenience, access, and cost are dominant drivers of utilization and spending.

One thing is for sure – their main competitor, CVS, is taking a no-holds barred approach to the same opportunity – albeit with a slightly different strategy involving deeper clinical services, delivery system partnerships, and of course more investments in their digital presence. For CAS subscribers, this month’s domain monitor explores this emerging consumer trend through a deeper dive on two key forces shaping the new landscape: virtual care and retail care, including a deeper look at what the other 900-lb gorilla of pharmacies, CVS Health, has got planned for the next few years.

Stay up to the minute.

“As biometric data becomes cheaper and easier to collect through smart sensors, devices, and mobile apps, expect to see more innovations in consumer health.”

-Alicia Vergaras

A Digital Dose of Magic Medicine

snake oilCardiovascular disease is the leading cause of death in America. One out of four adults has two or more chronic diseases. One in three children is overweight or obese. Projections are that by 2050, one third of Americans will have diabetes. These are America’s proverbial ball and chain: lifestyle-driven afflictions that are driving our healthcare spending through the roof, but which can be treated early, mitigated, and in some cases prevented altogether.

Well, what if there was a platform that could help millions to become healthier by encouraging them to take charge of their own health? It could empower people to start living healthier lives through self-driven, day-to-day improvements. Imagine this platform had the following advantages:

  • A high profile, endorsed by celebrities and beloved by households
  • A captive audience that is eager to engage
  • A delivery medium that most of us have in our own homes
  • An information-driven approach to get people to change their lifestyles

The Internet has been abuzz about Apple Healthkit, and Samsung SAMI, and Google Fit.  But more on those in a minute – I was talking about Doctor Oz.

With a TV audience estimated to be nearly 4 million and growing, and a realm of influence that stretches across the web, print media, and television, The Dr. Oz show has made the eponymous physician into a one-man empire with outsize influence over the hearts and minds of middle America. But not all has been healthy in the land of Oz.

As many in our professional circles cheered and jeered, Senator Claire McCaskill called out Dr. Oz as somewhat of a charlatan in front of the country during a testimony on Capitol Hill a few weeks back. Sen. McCaskill is chairwoman of the Subcommittee on Consumer Protection, Product Safety and Insurance, and has taken offense to Dr. Oz’s repeated soft-selling of “magic” pills for weight loss. Across the Internet, opinions abound about the ethical and professional boundaries Oz has breached by pushing products that, as a trained physician, he must know don’t have any scientifically proven benefits.

To be fair, the show and the content are not otherwise awful.The website is fueled by content from Sharecare, the website/startup run by WebMD founder Jeff Arnold and branded by Oz since 2009. Sharecare is a legitimate health IT play – they even hosted a #bluebutton Twitter chat recently, though like Oz, they can overdo the marketing hype at times. And of course, Mehmet Oz himself is a respected cardiologist with appointments at Columbia University and New York Presbyterian Hospital.

The issue isn’t that Oz is a dud – in fact, it’s that he’s far from it, but he still behaves like one when he’s in front of the cameras, either selling the next miracle cure or getting grilled by a former prosecutor now Congresswoman. As health IT’s own celebrity Doc, Eric Topol puts it in a 2013 New Yorker profile:

“He is keenly intelligent and charismatic. Mehmet was always unique, but now he has morphed into a mega-brand…The problem is that he is eloquent and talented, and some of what he says clearly provides a service we need. But how are consumers to know what is real and what is magic? Because Mehmet offers both as if they were one. It all seems to be in the service of putting on a show. And, when you add it up, that seems like something other than medicine. It’s more like medutainment.”

Some have framed the issue in terms of opportunity cost. With such a valuable platform at his disposal, what might be the public health impact be if Dr. Oz was a stronger advocate for judicious diet, steady exercise, and a more balanced lifestyle rather than miracle pills?

The sad truth is, people probably wouldn’t watch his show. In fact, he probably wouldn’t even have a show in the first place. Oz’s style-over-substance delivery is shaped by his studio audience, not the other way around. He has become so popular because the people watching his show crave shortcuts and quick fixes the same way they crave fast food. To give credit where it’s due, Oz understands the American people better than most of us in healthcare. Now if only he would lead some meaningful patient engagement on our behalf.

As much as we complain about silos in health IT, ignoring what’s going on on daytime TV reinforces our separation from the broader challenges we face in healthcare. We keep ourselves busy dissecting new smartphone platforms like Healthkit and hyping up their allure within our white-collar circles, even as we lose sight of the real competitors. Taco Bell too has been innovating for the masses. Think of five people you know – are they more likely to make sure their labs and meds are up to date for their next doctor’s appointment, or buy a 99-cent Quesarito? Automating data entry on these new platforms might possibly get us past the wall that the PHR industry collided with a few short years ago. But no amount of app automation will let us swipe past our own human nature.

In our innovation-addled culture, it’s understandable when people get excited about unproven promises sold to us by corporate wizards, whether in the form of a “magical” diet pill or a “transformative” ride sharing service or a “revolutionary” smartphone app. Dr. Oz’s recent episode serves as a reminder that in healthcare, there are a different set of standards when it comes to the believing the unproven. As healthcare professionals, we too can be tempted to take a seat in the studio audience and add to the chorus of oohs and aahs about new technology.

Let’s just remember that our industry may be part art and part science, but there’s no magic involved.

Has Avado Acquisition Awakened the WebMD Giant

gaint2WebMD, the once-darling of consumer health who seemingly lost its way following pharma dollars, may at last be coming back to its roots. Last week, WebMD made headlines by announcing it had purchased the young patient engagement start-up, Avado, for an undisclosed sum.

Backdrop:
Avado
, based in Seattle is a product of a healthcare accelerator, Start-up Health. Their core focus is Patient Relationship Management (PRM), which honestly, is just another term for patient engagement via a patient portal or traditional Personal Health Record (PHR). Like its top competitors MEDSEEK, RelayHealth, Medfusion, who was recently spun-out from Intuit and NoMoreClipboard, these solutions are EHR agnostic and typically deployed at enterprise sites where there are numerous legacy systems in place across the enterprise (e.g., EHRs, radiology, labs, etc.). Providing a patient with a single longitudinal view of their record along with an the ability to conduct some transactional processes. PRM solutions seek to accomplish two objectives – meet regulatory requirements and drive loyalty.

Within the healthcare sector patient engagement is becoming an increasingly hot topic. While we at Chilmark Research have been following this sector since our founding, only in the last 6-12 months have we seen interest significantly accelerate. Healthcare organizations (HCOs) of all sizes are now looking to deploy a patient engagement/PRM strategy, partly in response to stage two meaningful use requirements and increasingly, an understanding among HCOs that value-based reimbursement will necessitate a more engaged and loyal patient – can PRM facilitate.

But this acquisition is less about Avado than it is about WebMD, who has signaled their intent to diversify the business by adding some teeth to their own consumer portal offering in the near term. In the longer term, WebMD’s strategy will hinge on execution of their B2B platforms and their ability to turn informed consumers into engaged patients.

Short Term: An Investment in Diversification
WebMD has led the online consumer health information market since 1999, growing steadily into a publicly traded company (market cap: just under $1.6B) and a household name. Unsurprisingly, advertising and site sponsorship comprise 84 percent of their revenue; they enjoy over 138M unique monthly Web visitors and 22M mobile views. Remaining revenue comes from a provider-geared information network (Medscape being the best-known brand), and a private portal service, through which they create and manage customized health portals for self-insured employers and health plans.

WebMD has been milking these revenue streams for years, bringing little innovation to market. Frankly, they didn’t have to as the pharmaceutical industry with their fat marketing coffers kept WebMD fat and happy, for awhile.

That all changed when the pharmaceutical industry started hitting the wall with fewer new blockbuster drugs in the pipeline, while their breadwinners start coming off patents and succumbing to inevitable, low-cost generic competition. Marketing budgets crashed and with them, WebMD’s once highly profitable model. Of course it didn’t help that WebMD began seeing increasing competition from the likes of Everyday Health, Patient Conversation Media, and Demand Media (who runs livestrong.com).

After six quarters of being unprofitable from 2011-2013, WebMD is beginning to come out of its drug-induced stupor finally posted profits in Q2 and Q3 of this year. Consequently, it appears that WebMD has also come to realize that it will need to diversify. Hence, the Avado deal.

Avado has no strong brand, and fewer than a dozen customers, but it does have a vision that WebMD sees strong potential in. Coupling WebMD’s massive scale with a compelling PRM vision and platform could open new, untapped markets for WebMD, particularly among smaller ambulatory provider networks where Avado has gained traction and WebMD has strong presence. There is a huge opportunity here.

This is not to take anything away from Avado, who had not-so-quietly emerged over the last couple of years as a flag bearer for patient engagement through health IT. Dave Chase, Avado’s co-founder and CEO, has been one of the most vocal proponents of a business case for patient engagement, rooted in the growing realization that getting serious about between-visit care will be pivotal in bending the cost curve by managing the health care needs of an aging, and increasingly chronically ill population.

WebMD’s extant portal was/is somewhat rudimentary, with an HRA tool, access to some claims data, education/information features, and some health coaching functionality. They will likely fold these capabilities in with the Avado platform, which consists of the usual spate of tech features bundled into a PRM platform: secure messaging with Direct, a dashboard and visualization tools, administrative support (scheduling and billing), integration with existing practice management/EHR systems, and Blue Button+ compatibility.

Rather than going after a more established vendor, such as a MEDSEEK, this move allows, for relatively little money, an opportunity for WebMD to augment their portal offering with more sophisticated functionality without breaking the bank (some reports put deal value at $20-30M range, though our guess is closer to $8-10M). By choosing Avado, WebMD has opted to get a batter on base rather than swing for the fences.

More Than a Website…Or Are They?
It is unlikely that this deal vaults WebMD to the top of the patient engagement market – they will continue to be an information website above all else. However, they have steadily matured their platform over the last few years with improved, diversified content, a flagship mobile app (over 20M downloads), and a more personal, customized user experience.

More recently, they have incorporated a provider search function and begun integrating with their MedScape network so clinicians can push specific information (e.g. discharge instructions or care plans) directly to patients. At HIMSS they announced a partnership with Qualcomm Life’s device ecosystem so consumers could manage device-generated data directly through their WebMD accounts.

Yet with all these developments, some of which have been little more than announcements, the proof is in the pudding, which in this case isn’t out of the kitchen yet. Many questions remain: There hasn’t been a peep about the Qualcomm deal since March. How well do/will the provider tools work, and how many patients will use them? How is this going to integrate into clinicians’ workflow, and/or broader population health management solutions? And with any such offering, how will it be packaged and delivered to market?

Looking Ahead: Has the Giant Awakend
This is likely just the start for WebMD, which has a tradition of being a highly acquisitive company. Providing PRM solutions to ambulatory providers through their existing network is an easy first step, though success will be defined by execution and rationalization across the multitude of WebMD B2B offerings. Design, usability, and functionality will be crucial.

Next will be layering in additional functionality that is of high interest to consumers and physicians alike. Expect to see such features as pricing transparency, quality scores, and enabling additional transactional processes that simplify a consumer/patient’s interaction with the healthcare system. For the physician practice, WebMD may develop or acquire solutions that facilitate referrals, care coordination and possibly even administrative functions such as eligibility checking. Look for future acquisitions here as WebMD still has many gaps to fill.

The biggest implication of this acquisition is, however, that a sleeping giant may have awoken and has decided that too many mice have been eating from its plate. The market is awash in small companies who are all looking to tackle some aspect of consumer/patient engagement. Some of these, like Avado, may ultimately be acquired, but many, many others may be squashed underfoot. The next 6-12 months will show whether or not the giant has truly awakened, or simply was walking in its sleep.

2013 – A Year of Surprises

In the blink of an eye, a New Year has appeared and with it the need to look into our crystal ball (or is it a magic 8 ball) to make our annual predictions for the healthcare IT sector. Personally, I find this to be one of the more interesting and seriously fun parts of being an analyst.

Be forewarned, we’ve seen enough mealy-mouth, water-downed predictions as of late that simply state the obvious to last a lifetime. So let’s crack a few eggs and make some stretch predictions shall we. (Note: each analyst has contributed a prediction or two, which is noted).

1) Structured Data will Remain Gold Standard in 2013 – Cora
Despite Watson and all the buzz about mining unstructured data, the only data that will be analyzed in volume in 2013 will remain structured data. Forget about the 80% of health data that is unstructured. Simple key-value matching will continue but robust, rigorous pattern matching, NLP, etc, will have to wait.

2) The Need to Address Data Quality Moves to Forefront – Cora
Data quality issues (DQ) will become increasingly visible as more providers wonder why their clinical data is such garbage. Providers will be shocked they need to invest in DQ specialists/departments/processes (along with the security to support them).

3) Many ACOs Come to an “OMG, What Have We Done” Moment – Rob
For the first half of the year healthcare organizations (HCOs) will be all buzzy implementing, on paper, gain-sharing ACOs. By Independence Day these same HCOs will begin figuring out it is hard and expensive to set up an ACO and that their back office financial management tools are inadequate. By the end of 2013, just two years away from Risk Assumption ACOs (RAACOs) HCOs will take one of three paths: 1) realize ACOs carry all the risk and more of HMOs and bow-out; or 2) scramble to purchase and implement complex financial management software; or 3) cash-out and sell themselves to a payer.

4) Several HIE Vendors Pack Bags & Leave – John
Virtually all of the federal funds distributed to States to stand-up their statewide HIEs has been allocated. Without that federal largess we will begin seeing some vendors exit the HIE market. Who will they be? Think large companies with lots of brand equity and close ties to lobbyists but with only modest healthcare experience. Those vendors that remain must now contend with upping their value proposition beyond simple information  exchange (Direct Secure Messaging will take over that task). Some of the weaker HIE players with limited resources will be looking for a buyer.

5) HIE Market Growth Begins to Slow -John
Over the last several years the HIE market has been growing at a blistering pace well in excess of 30%. That growth will begin to taper off ever so slightly in 2013, say 18-22% CAGR as all who have adopted a solution continue down the arduous path deployment and on-ramping ambulatory providers to extract value from their HIE platform.

6) Despite Strong Growth in Direct Secure Messaging (DSM), Fax Isn’t Dead Yet – Brian
Volume growth in use of DSM sent via health information service providers (HISPs) in 2013 will exceed 100% driven primarily by integrated delivery networks (IDNs) seeking efficiencies and referrals. Despite this impressive sounding growth, far less than 5% of all care transitions will use DSM by end of 2013. And don’t forget, numbers lie. Much will be reported in 2013 on the growth in absolute number of secure email IDs issued by HISPs, but the majority of those accounts will remain inactive.

7) EHR Source Code Subpoenaed –Rob
We will see our first EHR software source code subpoenaed in a malpractice lawsuit this year – the developer will be named as a co-defendant.

8) Chorus Grows Louder, Politicians Weigh-in and MU Program is Put in Stasis – John
HITECH & meaningful use (MU) have done their job, by and large as EHR adoption and use has swelled dramatically throughout the healthcare sector. But there is also a dark-side. Deploying software so that it is effectively used takes time. Unfortunately, the provisions of ARRA do not allow for time to be taken, which is leading to a rapid cram-down of EHRs and associated MU requirements on clinicians. Early signs of a backlash began appearing in 2012. That backlash will come into full bloom in 2013 leading to Congressional hearings and ultimately someone in the White House being forced to hit the pause button on MU requirements.

9) Quantified Self (QS) Crosses Over into Healthcare – Naveen
The peripheral, biometric, consumer market is starting to bloom. In addition to completely new products and companies, we will see development of more flexible platforms driven by a focus on open APIs. Employers will start to incentivize the QS movement as part of their benefits programs. There will also be a shift from wellness-only into light medical use of these devices for such things as physical therapy/rehabilitation programs, mood tracking, sleep tracking and simple pain reporting.

10) Providers Take Interest in Health & Wellness Solutions – John 3
Payers and employers are the traditional markets for health and wellness solutions. But in 2013, those healthcare organizations (HCOs) that are moving towards capitated care models will markedly step up their interest in and adoption of these solutions. This will also result in new hires (health coaches, nutritionists, etc.) as clinicians balk at taking on added responsibility.

11) Emerging Conflicts Over Patient Generated Health Data – Cora
Conflicts will emerge between EHR data and user-generated health data.  Early adopting QS-type patients (see prediction 10) will be bringing in their mobile-app-generated data to their doctors. Majority of doctor(s) will declare that the data doesn’t match up to their records and will not accept it. Resulting conflicts over how/if to get this data into the medical record will ensue.

12) Patient Experience Begins Being Factored In to Treatment – John 3
With increasing attention on patient/customer satisfaction and need to improve adherence to treatment plans, innovative HCOs will begin adopting mHealth solutions that enable patients to track, in real-time, their treatment experience. Treatment plans will be modified “on-the-fly” based on these “experiences” to improve adherence.

Of course there were many other predictions that we mulled over that ultimately landed on the cutting room floor. What remains are predictions that we felt will create the greatest disturbances or ripples in the industry. Predictions that are generally not all that obvious or maybe it is just that there are not many who wish to state such in writing (we’re not shy).

Whatever the case may be, these are our predictions. we’ll stick by them unless someone has some incredibly brilliant argument as to why we have it completely wrong (that’s what comments are for).

So have at it everyone, are we on target, or will we completely miss the mark in 2013?

 

 

Re-entry into Healthcare

As with the last shuttle mission making its re-entry into the Earth’s atmosphere yesterday, I am re-entering the world of healthcare IT after an extended family vacation in the wilds of Alaska. No, I did not see John Halamka up there, it is after all a VERY BIG state, but I did get the chance to go completely off-the-grid, a blessed reprise and observe what is one of the more beautiful and still untouched landscapes in the northern hemisphere. Upon finally arriving in Vancouver I made the vow to return, but next time it will be to spend more time in the small coastal towns of the Alaskan peninsula, likely via an expedition kayak, to get up close and personal with the people and environs of this small corner of the world.

After being away for nearly two weeks, it is a challenge to pick up where one left off. Cruising through the reams of email (please excuse any delays in getting back to you I’ll get to your email yet, I promise), trying to catch up on my reading of the various industry rags and tapping twitter I feel pretty comfortable in stating the more things change, the more they stay the same (not exactly the best quote for an analyst to say as we thrive on turmoil…).  That being said, following are a few items that did catch my attention and may look into further:

FDA Releases Proposed mHealth App Regulations
On Tuesday, the FDA finally released guidance on how it intends to regulate mHealth Apps. Having taken a cursory review of these proposed regs, have to say I’m quite impressed as the FDA has struck a careful balance of  applying regulatory review where warranted while allowing plenty of room for innovation in this very young and still immature industry sector.  MobihealthNews has a fine write-up on this story.

WebMD Provides Abysmal Guidance and Tanks
WebMD, which has been seemingly immune to the recession, provided Q2’11 guidance that sent its stock into a tailspin and leading to a very rapid (next day) letter to investors from the Chairman to quell fears. Why is this significant? First, pharma is feeling the effects of the recession and is pulling advertising dollars off the table. Over the last few years, WebMD has been putting virtually all of its “eggs in one basket” – pharma. It appears that the golden goose of pharma is no longer laying golden eggs which will likely have a ripple effect on the multitude of other smaller Health 2.0 like companies whose business models are advertising based. Secondly, once again WebMD is projecting contraction in its “private portal” business. This is, or at least was, the 800lb gorilla in the PHR market for employers and payers. WebMD has milked this cow for about all its worth and do not be surprised if others start aggressively moving in. Cerner is one and we’ll talk about another tomorrow.

Stage 2 Meaningful Use Likely Delayed till 2014
Can’t say we didn’t see this coming as ONC’s advisory board basically recommended such but it does complicate the schedule for incentive payments which, as part of ARRA were meant to create jobs and create those jobs quickly. As the recession continues to drag on, there appears to be an acceptance that getting back to near full employment in this country will not occur quickly. Such acceptance has appeared to bring some rationality as to the rollo-out of EHRs. Choosing, installing, mapping workflow, testing, training and going live with an EHR, let alone meet the various requirements of meaningful use (MU) is no small task and this delay will bring a sigh of relief among many a CIO and eligible professional. But now one has to wonder: What does this mean for Stage Three?  Don’t be surprised if Stage Three gets the ax.

I’m sure there are other bits of news that I missed and welcome your input to help educate this off-the-grid analyst on all the wonderful things he missed as he was trudging through the temperate rain forests of Alaska or battling grizzlies for a share of their salmon (note, grizzlies don’t share).  BTW, this last picture is of one of the “deep forest creatures” you’ll find in that rain forest.

What do WebMD’s Q3 Numbers Tell Us?

Yesterday, the big 800lb gorilla in the PHR market, WebMD announced 3rd quarter earnings that were quite mixed. While its public portal business continues to see strong growth in uniques (now over 83M visitors/month) and advertising revenues that grew 26%, its private portal business continues to produce lackluster results, with flat revenue and holding steady with 124 clients. Even worse for the private portal business, WebMD is projecting a net decline of some 8% for this division in the 4th quarter.

Strong growth for the public portal reflects what other studies and recent surveys have shown: Consumers continue to turn to Dr. Net for a second opinion, self-triage, or simply advice on how to deal with a specific condition.  What is interesting in the case of WebMD is that despite the increasing power and sophistication of search engine technology from Google and the more recently introduced Microsoft Bing, consumers still look to a site like WebMD’s to provide more structured content that is easy to search, review and assist them in managing their health or the health of a loved one.

Zero growth and projected contraction in Q4 for the private portal operations of WebMD is a different story. The private portal business serves both the employer and payer markets wherein WebMD hosts a member or employee PHR for a client. Since late 2007, Chilmark Research has been tracking WebMD’s private portal business as a barometer for sponsored PHR adoption by employers and payers. Now one might easily assume that the downturn in the economy and the lay-offs of hundreds of thousands of employees may have something to do with WebMD’s Q3 results for its private portal business. Problem is: WebMD has been reporting lagging results for this line of business for as long as we have been tracking it so something else must be at play.

Late last year I had a discussion with a senior executive at BCBS-MA. During that conversation I asked what motivated them to take the bold move (at least it was at the time) to allow members to export their claims data to Google Health (BCBS-MA was one of the first payers, if not the first, to allow claims data to be exported by the consumer to a site outside of the payer’s control, in this case to Google Health). The answer, it was a simple business decision. BCBS-MA was spending a lot for WebMD’s private portal and few members were using it. So instead of spending that money on WebMD, the decision was made to turn over the data to the member/consumer allowing them to export it to Google Health and let the member decide how they wished to use their data. Thus, like BCBS-MA, other payers are likely not seeing tremendous adoption and use of their WebMD-hosted PHRs and are not increasing their investments in the service.

On the employer side there may be some contraction in use due to employee lay-offs and a tightening of the belt by employers, but this is likely a very small factor in why WebMD has failed to grown this line of business. Other factors at play are:

Employees still remain reluctant to participate in an employer-sponsored PHR due to concerns of privacy of their health data and how that data may be used against them e.g., deny a promotion.

The efficacy of employer-sponsored PHRs in lowering MLRs (medical loss ratios) and subsequently health insurance costs is far from proven, thus employer ROI is in question.

WebMD has a reputation of being expensive and difficult to work with. Chilmark has also heard some rumors that WebMD is putting very little into improving the capabilities of the private portal platform,- its on life-support. This last point should not come as a surprise considering the results of this business line.

So what does this mean to the broader market?

First, consumers are increasingly turning to sites such as WebMD’s to gather information to assist them in their health and wellness decisions. The WebMD property is a very strong brand, remains one the top go to sites for health information, their iPhone app has consistently ranked as one of the top health apps and thus WebMd can command a premium from advertisers. Unlike most Health 2.0 companies who also seek to leverage the all too common internet advertising model to drive business with little success, WebMD is actually doing it quite successfully.

But WebMD has a major problem in its private portal business and rather then make a concerted effort to put this business back on the right track, the company seems perfectly content to milk this cow for all its worth. That strategy provides an opening for other companies to step in.

The challenge for new entrants, however, will be their ability to provide a comprehensive health and wellness solution that is comparable, if not improves upon the WebMD offering. Today, while there are plenty of products and services in the market that attempt to address various health and wellness needs of employers, there are virtually no solutions that provide as comprehensive a portfolio of services that WebMD currently provides. Employers and payers are looking for options (this was part of the justification for some employers who came together to create Dossia and the separate efforts of Aetna and United Health Group), there is demand, but few options exist outside of creating your own.

Ideally, through acquisition(s), partnership(s) and merger(s) such a solution can emerge to serve the employer and payer markets. Now the question is: Who will step up to the plate and make it happen.

WebMD’s Private Portal Business Continues Slide

WebMD announced first quarter earnings today that showed continued lackluster results for their “Private Portal” division, slipping roughly 5% year over year from $23M to $21.8M.

Now one could argue that the overall decline in employment due to the recession is to blame for the drop in clients from 134 to 131 in Q1-2010, but we see something else at play: high pricing for low value delivered.

Having spoken to a number of existing and former customers of WebMD, one gets the clear sense that the private portal business is no longer core to WebMD’s corporate strategy and frankly why should they as they reported overall growth of an impressive 20%.

Its pretty clear to us that the private portal business of WebMD is a business they intend to milk for all it’s worth. This may create opportunities for newer companies to capitalize on. The challenge for them will be to provide a full suite of solution capabilities as few employers or payers today are seeking niche solutions.

WebMD + Social Media, NOT!

Today, WebMD announced the launch of its new social media initiative, WebMD Exchange.  It’s a dud.

Being WebMD, the leading online consumer health, it is a bit surprising that they are so late to the party as there are now quite a number of health-related social media sites such as one of Chilmark’s favorites, the focused Patients Like Me or the more broad ranging site MedHelp.  Thus, with this announcement one would think that WebMD would have studied the other sites, learned what works and what does not and provide a compelling site.

So much for assuming.

Went to the site today to check it out, here are the quick pluses and minuses:

In the plus column the site has…

1) A number of exchanges to address a wide range of conditions.

2) Some of these exchanges focus on care giver issues, such as parents of children with depression.

3) Registered members can create their own exchanges.

4) For diseases with medications, a list is automatically generated of the relative popularity and use of various medications with member reviews (e.g. side effects, overall effectiveness, etc.).

In the minus column the site…

1) Is cluttered and noisy, hard to determine what to read that is pertinent and what is fluff.  Seems to be an amalgamation of everything not to do in a social community site, let alone one addressing health & wellness.

2) Has far too much noise coming from ads. Now ads are not a bad thing if they pertain to the disease/condition within that exchange.  Finding a postmenopausal ad in a section on cancer or a Charmin toilet paper ad in childhood depression?  Please, WebMD, the technology is there to do a better job than this for your members.

3) Takes to long to navigate due to all of the click-thrus to see pretty much everything.  Since online ad pricing algorithms often have a site retention/click metric, WebMD is purposely making it more difficult to get at content to maintain its ad pricing power – not nice WebMD.

4) Has very little if any policing seems to be occurring leading to the creation of many communities (exchanges in WebMD parlance) that are of little value or just plan silly.  A favorite in the Anxiety-Panic category was the Exchange, OMG Zombies.

5) For some conditions there can be several exchanges. Fine, nice to have choice but which one is truly a vibrant exchange.  Well, that answer is not apparent until you click-thru (more clicks, more ads) to determine if an exchange is vibrant.  Royal pain in the a**.

Bottomline:

WebMD’s attempt at using social media within the context of these exchanges is late to market and one of the poorest executions of such that we have seen.  Granted, maybe we had high expectations for WebMD as it truly is the 800lb gorilla in this market. Sadly, those expectations were not even close to being met.

Hey WebMD, why not take a smidgen of that $800M in cash and investments you have hoarded up and actually do this right.  It will be an extremely modest investment that could pay off handsomely rather than this half-baked attempt which is frankly embarrassing and will likely fail.

The PHR Risk: Revolution Health Axes PHR

Revolution Health is closing down its Personal Health Record (PHR) service at the end of February.  Below is the email sent to those with a Revolution Health PHR account.

Thank you for being a loyal user of the Revolution Health Personal Health Record. Unfortunately we will be discontinuing this service as of the end of February 2010 and removing all records, information, and data from the Revolution Health Web site.

So that you don’t lose the information you’ve entered into the system, we strongly suggest that you download your personal records as a PDF to print and save for future reference. To do this, simply follow these instructions:

1.       Log in to your Personal Health Record.

2.       From any page of your record, click on the “printable version” link on the top right corner of any page. When you see a pop-up box asking you to “Select the following sections to include in your print out,” simply make sure that the sections you want to print and save are checked and then click the “Submit” button.

3.       Once the PDF is created (this only takes a moment), you can print directly from it and/or save it to your computer. To print the PDF, click on the printer icon at the top left of the page. To save it, click on the disk icon to the right of the printer icon.

If you encounter a problem printing or saving your records, please e-mail our customer service department at CustomerCare@revolutionhealth.com for assistance. Even after the Personal Health Record is no longer available, Revolution Health and our partner sites will continue to offer you the same great health information and community pages as always. We hope you continue to visit Revolution Health often to take advantage of our offerings.

Thank you,
The Revolution Health Team

Revolution Health, the one time Internet consumer healthcare upstart darling that founder Steve Case (AOL fame) stated would change healthcare as we know it, flamed out early after a series of strategic missteps and ultimately was sold to the online health publisher, Everyday Health, who is now preparing to do an IPO in 2010.

It’s not like this is a great loss to the nascent PHR industry (Revolution Health actually had a pretty p*ss-poor PHR) nor a signal that PHRs are dead, though Chilmark Research has argued that no one is interested in a digital file cabinet for their health records, which most PHRs are today.  Rather, the PHR market is extremely difficult to gain traction in and all but impossible if a PHR vendor is pursuing a direct to consumer (B2C) marketing strategy.  Revolution Health was attempting such and failed.  PassportMD was pursuing such and was recently acquired.  Countless other PHRs in the market pursuing such a B2C strategy are simply the walking dead – zombies that still have a web presence but no activity (e.g., VitalChart).

What this announcement does say, however, is that one needs to be careful in their own assessment of a PHR for personal use or even if they are looking to sponsor a PHR for their members (payers), employees (employers), or customers/patients (providers).  Not all PHRs are created equal, not all will survive.  Look to those that have a broad customer base, steer clear of those that are solely focused on the consumer.

What is truly odd in this announcement by Revolution Health is that rather than offering their customers the option to directly export their data to another service, be it Google Health, HealthVault, WebMD or one of the PHR players in the market, they are taking the most expeditious path out the door.  Not exactly consumer friendly.  Also, Revolution Health states it will remove all records from the website, but says nothing about what will happen with this highly personal data thereafter.  Will it still be on their servers?  Lastly, why is it that when one goes to the Revolution Health website, you can still register to create your own PHR account?

Now how screwed up is that?!

ADDENDUM:

Ted Eytan, of Kaiser-Permanente, gives his own spin on the story arguing that it is not that consumers do not want a PHR, its just that they seek a solution that actually helps them manage their health and in KP’s case, their interaction with this healthcare provider.  Impressive statistics at KP, truly a leader in this market that virtually all in this market can learn from.

Too Many Content Plays = Unsustainable

Here at the Health 2.0 conference and have heard far too many demos (really just pitches) from a multitude of Health 2.0 companies that are really nothing more than some form of glorified search engine.  It is clear that very few, if any, of these companies will be around in five years as there is simply not enough differentiation between what they are offering the market, and what the established brands (WebMD, EveryDay Health, Google, etc.) already offer.

Probably the most frustrating aspect of the Health 2.0 event, of which more will be discussed later is a lack of transparency on the part of these Health 2.0 vendors to tell the audience how they are growing, where they are seeing traction and why we should even care.  Please folks, you want someone to remember you?  Give them numbers that substantiate your reason for existance.

Did a quick comparison of two of the demo Health 2.0 companies with the 800lb gorilla of health content on the Web, WebMD.  Not a pretty picture.  One Health 2.0 company has seen a slide in the past year of over 40% and the other, while seeing good growth, is but a gnat on the big gorilla’s arse.

content-biz

crystal-ballMaintaining a tradition among IT analyst firms, following is Chilmark Research’s forecast of Top Trends for 2009.  While there is a significant amount of “crystal ball gazing” in any forecast, 2009 is particularly challenging due to an economy that has yet to stabilize and a new administration and re-invigorated Congress that seeks to “reform healthcare.” Against this backdrop, our predictions reflect and extend what we have seen in 2008, our continuing research, and conversations with numerous stakeholders in the healthcare sector.  As always, we welcome your feedback, via comments on what you foresee in 2009 as well.

Without further adieu our Top Ten are:

Healthcare Not Immune to Economic Woes: Declines in investment returns and philanthropic giving coupled rising bad debt, fewer consumer/patient visits (delay care) and increase in charity care will wreck havoc on an industry sector that is accustomed to being immune to economic downturns. As it pertains to healthcare IT (HIT) spending in 2009 will be way down as healthcare providers look to control costs.  Providers will go into maintenance mode simply maintaining the systems they now have in place. IT projects at least 50% of the way towards completion will see continued funding, if they can see light at the end of the tunnel and ROI will be quickly realized.  All other projects will be curtailed, delayed or killed.  Some bright spots in all this doom and gloom; apps that focus on eligibility checking, revenue cycle management and more progressive cloud-based offerings (e.g., HIE with hosted EMR) will see reasonable growth in the 8-12% range.

Health 2.0 Companies Shrivel on the Vine: As consumers take on more responsibility for healthcare costs and seek low cost alternatives, use of the Internet as a virtual doctor/adviser will increase.  Despite this increase, most Health 2.0 companies fortunes will evaporate for three simple reasons:

  1. Not enough competitive differentiation. There are far too many “me too” apps in market today.
  2. Access to additional funding and exit strategies have evaporated. Reliance on advertising revenue will only sustain “Big” Brands as Internet advertising contracts.
  3. Poor go-to-market strategies including; lack of partners, ill-defined value proposition and poor positioning.

Those Health 2.0 companies that address all three concurrently and successfully are the ones to watch – ignore the rest.

Retail Health Clinics Gain Traction, Corporate Clinics Stall: Budget-constrained consumers seeking lower cost alternatives, and payers encouraging such practices, will increasingly turn to retail clinics for much of their healthcare needs in 2009. This will lead to continued growth in use and build-out of retail clinics across the country.  Despite their potential savings, corporate clinics are a long-term investment. Corporate clinic providers such as the two Walgreens acquired in 2008, (i-Trax and Whole Health) will see growth stall as employers layoff employees and pursue shorter-term cost cutting strategies.

Virtual Visits – A Mixed Bag: Related to Health 2.0 is the proliferation of Internet-based third party healthcare service offerings, (e.g. American Well) which bring together technology, streaming video and an ability to access a doctor over the Web 24/7.  Problem is, healthcare is based on trust and as inherently social creatures, humans base trust on direct, in-person interactions.  Thus, third party virtual visits will struggle.  This will not be the case for eVisits with a consumer’s existing physician/care team where a relationship already exists.  eVisit reimbursements are now becoming commonplace and consumers will increasingly use such services due to convenience and lower costs.

Dossia Ramps-up: Over two years in the making and a couple of stumbles along the way, Dossia was finally launched in late 2008 with roll-out to consortium member Wal-Mart employees (actually, WebMD roll-out with WebMD sitting on top of Dossia stack).  Earlier this month Dossia announced its second PHR partner, Medikeeper.  While Dossia’s ecosystem of partner apps is dwarfed by Google Health (GHealth) and Microsoft’s HealthVault, Dossia brings something to the table that the other two platform providers do not, some 8M+ potential users (employees). Expect at least three more of the consortium’s eight members to begin rolling out the solution, via PHR vendor, to their employees.  We are placing our bets on Pitney-Bowes, AT&T and Intel to go live in 2009.

Chicken & Egg Scenario Plays-out for GHealth and HealthVault: As Google Health and Microsoft look to add more partners, in particular data providers such as pharmacies (GHealth) or payers (HealthVault) the big question remains: Will consumers begin actively storing their health data on these sites and subsequently engage any of the numerous apps that sit on top of these repositories?  Right now it is a very mixed message.  Today, traffic and subsequently use of either platform remains lackluster.  Early reports are that GHealth is generating some decent consumer traffic (click-thrus) for partners.  HealthVault, however, is generating very little traffic for its partners, but has created better visibility for these partners among larger corporate entities (e.g., payers, employers, providers, etc.).

Over the course of 2009 expect Google to become slightly more aggressive, first with biometrics, second with support for other standards and third attracting new partners, especially data owners.  This last point is contingent on additional standards support. HealthVault will couple its aggressive actions to bring more data providers (payers & providers) and software partners into the ecosystem with direct to consumer marketing. HealthVault’s biggest challenge will remain – creating an engaging and easy to use interface for the consumer.

New HIE Models Leveraging Cloud Computing and SaaS Gain Traction: Chilmark Research recently completed a project for a client that gave us an opportunity to gain an in-depth understanding of the HIE/RHIO market.  What is clear is that the vast majority of  quasi-public RHIOs still have not figured out a funding model that is sustainable (e.g.,  CalRHIO is one hairy initiative that will be declared DOA in 2009).  Health Information Exchanges (HIEs), that are increasingly receiving funding from payers or are set-up within a given IDN will continue to see reasonable, low-double digit growth.  Those HIEs that prosper will be based on a cloud computing model and offer small physician practices, at little or no cost (sponsored by payer), via SaaS, such services as lightweight EMRs and eRx capabilities. We learned of several such projects, yet to be announced, that will roll-out in 2009.

Continua Compliant Devices Hit Market with Little Impact to Anemic Telehealth Growth: The industry consortium, Continua, recently announced that Continua compliant biometric devices will enter the market in 2009.  Problem though is that Continua compliant devices only alleviate vendor lock-in for one can now mix and match Continua compliant devices from various vendors.  Continua does not address the much broader and seemingly intractable problem of how to incorporate telehealth into the existing workflow of care providers and even more importantly, reimbursement models for telehealth remains immature.  Until these issues are addressed, 2009 will not see a major boost in the sales of biometric devices.

Dreams of Big Fed Spending on HIT Do Not Materialize: Despite campaign promises and HIMSS Blueprints, healthcare reform and funding for HIT will not materialize in any meaningful amount in 2009.  Half of the problem will come from continued economic woes in other sectors seeking rescue from federal coffers that will start drying up.  The other half of the problem will result from healthcare reform, in all its many guises, that languishes as Congress over-reaches with its multitudinous approaches and little reconciliation in ’09.  We expect 2010 to hold more promise.

mHealth Continues Expansion, Most Apps Lame: We see tremendous promise for mHealth and honestly believe it will be here that consumers truly engage in health and wellness at a very personal level.  Despite the enormous potential, and a growing number of mHealth apps available for the consumer, we find that the vast majority of these apps are incredibly simplistic and do not fully leverage new smartphone capabilities.  Over the course of 2009 we will see far more apps, particularly those originally developed for the iPhone, being re-purposed for Google’s Android OS, the BlackBerry OS and in Europe, for Nokia’s Symbian OS.  Some truly novel, excellent apps are expected, but these will by far be in the minority.

That’s “IT” everyone and to a certain extent this list defines our research agenda for 2009.  Stay tuned, it promises to be an extremely interesting year ahead.

WebMD Targets Physician Community Prize

Just received a PR this morning from WebMD where they are crowing that they are now Numero Uno in the physician social networking sphere.  The PR claims that their relatively new social networking site, Medscape Connect now has over 100K registered users.  Pretty impressive number considering they were initially caught flat-footed when Sermo came on the scene and did not even launch Medscape Connect until this past April.  Just goes to show what an existing market presence can do for a company that wants to quickly gain on upstarts.

Not so sure that Medscape Connect is indeed Numero Uno though and the press release says nothing about which third party numbers they are referencing to make such a bold claim. (Note: just Googled Medscape Connect for link to site and Google ad for Medscape at top of page has not been updated – states 60K members, hmmm makes one wonder). In October at the Health 2.0 conference, Sermo claimed to have 90K registered users .  According to Compete.com, Sermo is still seeing healthy growth in visitors and if one were to extrapolate, the significant uptick this fall, would put them well over the 100K number today.

sermo

With some 700,000+ physicians in the US and many times that number worldwide, there is plenty of room in the market for more than one provider of social networking tools for physicians.  Another physician networking site to track is medicspeak, which is the only one that has an interenational audience.  You can find more complete, abeit abstract, profiles of all three at eMedicineLive. The challenge though is converting these social networking sites into rich in content and profitable to investors opertaing entities.

A challenge that all of these sites will face going forward.  It is here, with the economic model that WebMD has the edge.  The vast Medscape property allows WebMD to forgo profits in one area if it contributes to click-throughs and impressions (ad-rev metrics) in another.

FDA Partners with WebMD to Distribute Content

Just received a PR from WebMD announcing a partnership with the FDA to distribute FDA content (consumer health news and alerts) via WebMD channels (both Internet and print).  This is not too dissimilar to what the FDA is currently doing with Medem, though the Medem partnership is targeting physicians and is focused on providing specialty-specific alerts (black-box warnings).

Looking at the MOU between the FDA and WebMD it is quite clear what drove the FDA to partner: gaining visibility and getting the word out.  While the FDA gets some 6M visitors a month, most of those visits come from those the FDA regulates.  On its Consumer Health site, the FDA sees a paltry 130K/month vs. WebMD’s 40M/month.  The MOU clearly states that this is a non-exclusive agreement (as one would imagine) and what is particularly nice is that the new FDA-centric site on WebMD will not have any advertisements (probably the only place in all of WebMD.com where you won’t be buried in ads).

Taking a quick glance, looks pretty basic – several category boxes (e.g., food safety, med. devices, drugs, etc.) with a few topics each, which are just hot links to the FDA Consumer Site.  Hopefully, these two will work together to improve the user experience as right now, it is very Web 1.0 and a pretty lame one at that.

United Health Jumps Into Consumer Fray

Being the nation’s largest heatlhcare insurer, it was only a matter of time before United Health Group (UNH) jumped into the fray of providing a consumer-centric healthcare website, which they announced this morning, myOptumHealth.com.  This follows similar moves by competitors CIGNA (finally coming on-board), Wellpoint (who seems to be adrift) and Aetna, (leader fo the pack) who introduced their SmartSource solution earlier this year and announced in October that they would allow members to export their claims data to HealthVault.

But there is an important twist with the UNH announcement.  This is a straight consumer play and will go in direct competition to existing players such as WebMD, Yahoo Health, and Waterfront Media (who recently merged with the now defunct RevolutionHealth). This is a big departure from its traditional competitors, other health insurers, whose initiatives have focused strictly on their existing members (the right-hand side of the slide below).

optum

Looking more closely though the basic myOptumHealth is not all that new, nor is the business model as this is as much a rebranding of their consumer-facing PHR which they acquired a couple of years back, Health AtoZ.  The HealthAtoZ PHR is a pretty decent solution that received high ratings in a number of categories in the iPHR Market Report that Chilmark Research published earlier this year.

It is also clear, however, that the OptumHealth Group at UNH have significantly built upon HealthAtoZ via a number of partnerships which are as follows:

  • A.D.A.M. – Providing interactive health slide shows.
  • HealthDay News – a daily health news service that a consumer may subscribe to.  Does not appear to support customization.
  • Healthline – Health-related search engine.
  • Healthology – Providing some 600 health streaming videos. Note that iVillage, the company that acquired Healthology for $17.5M, has taken steps in 2008 to trim costs that has lead to little “new” content. Tried one of the videos, not a user-friendly experience. Not the best partner to choose, but I bet the price was right.
  • Healthwise – Health content in Spanish for Hispanic population.  Healthwise is quite pervasive as a partner for health content on a number of health insurer sites.
  • Multum – Medication information including interaction checker, alerts and approvals. Multum is a Cerner product.

The site also has a doctor finder that uses the Igenix solution, a company UNH acquired several years ago.  Did a quick search on the finder, pretty poor as it was slow, provided few specialties to choose from and gave only the most basic info on a given physician.

In 2009, OptumHealth plans to roll-out specific health/disease-centric communitites similar to the one they launched earlier this year, my CancerHub.  Based on a cursory review of myCancerHub, other sites such as MedHelp and PatientsLikeMe need not worry as myCancerHub discussions are ancient (most recent posting, 3 months ago!).

Note, that in addition to this announcement, we have received information that UNH, through its OptumHealth Group is working with all three personal health platform (PHP) plays, Dossia, Google Health and HealthVault in support of portability for claims data.

Wrap-up

Interesting and novel push by UNH into the direct to consumer (D2C) market.  Yes, consumerism is coming into healthcare with consumers increasingly looking to the Web for information that helps them manage their health and/or the health of loved ones.  It is good to see a health insurer openly acknowledge this trend and move in a direction to not only assist their members, but support the broader market as well.

It is also apparent that WebMD and others are not the only ones seeing some healthy advertising revenue opportunities in the health & wellness sector. Yet, beyond this obvious revenue source, UNH will be able to leverage myOptumHealth for effective cross-promotion of other UNH services such as health coaching, vision & dental insurance, life insurance, and health-related financial services.

As with all these sites though (myCancerHub is a clear example), the big question remains: If you build it, will they come?  It takes far more than a press release and a collection of partners to gain traction in what is becoming a crowded market.  It will take some pretty hefty marketing spend. That doesn’t mean you have to advertise during the SuperBowl, but it will require investment and it is unclear just how much OptumHealth is willing to invest. Based on partners chosen and features out of the box, looks like they are not investing at the level they will need to to become a serious player in the D2C healthcare market..

It also remains to be seen how consumers will respond to a site sponsored by a health plan.  Sure, they may go there to collect basic health & wellness information, but will they use a health plan’s PHR if they are not a member?  First, it is exceedingly rare that a consumer is willing to populate any PHR on their own, let alone one from an insurer, as it raises all sorts of fears of future denial of claims.  Secondly, will consumers trust OptumHealth with this data?  Looking at myOptumHealth’s privacy and security statement (in the PHR section), while clear and straight-forward, it says nothing about how such data might be used.  In other words, there is no clear statement saying: No we will never use your data without your expressed consent. That definitely puts the brakes on for us.

Grade:

A: for initiative and risk taking

C-: for execution

F: for privacy policy (or lack thereof)

Signs of the Times: WebMD Calls off Acquisition

In mid-September, WebMD announced that it would acquire Marketing Technology Solutions (MTS), owner of the QualityHealth website and two other helth-centric Internet properties for ~$50M.  Now, barely 2 months later, WebMD announced, in a terse press release this morning, that it has backed away from a complete acquisition of MTS and has instead taken a minority stake in MTS and signed an advertising services agreement with the company.

A couple of scenarios may have led to the pull-back by WebMD.

  1. There have been several recent reports that Internet advertising is trending downward.  A recent JP Morgan report projects overall Internet advertising to slow from 19% growth in 2008 to 16% growth in 2009 (Note, this was JP Morgan’s second downgrade for Internet advertising growth this year, first in Sept., most recently, beginning of Nov.). That does not seem so bad until you look at their projections for “display ads” which dominate both WebMD’s site and the sites of MTS.  Here JP Morgan is forecasting a steep decline from 16% growth in 2008 to just 6% growth in 2009.  JP Morgan is not alone as Nick Denton, founder of Internet media network, Gawker, is even more pessimistic as to what is in store for 2009.  WebMD may very well be seeing the same things among their own customers and rather than take a risk on expansion through full acquisition, is taking a much more cautious approach.
  2. The other scenario, which is less likely is that upon closer review of MTS’s business (growth, customers, books, etc.) WebMD may have decided that MTS was not quite as valuable as they originally thought and that the $50M price tag was too steep a price to pay.

My bets are on the first scenario, which if true, will reverberate throughout the nascent Health 2.0 market.  As we reported during our attendance at the Health 2.0 conference, far too many companies were staking their livelihood on an advertising model.  Clearly, that will not be enough going forward and 2009 will be a very tough year for many.

WebMD on the iPhone

iphwebmdLast Thursday, WebMD released an iPhone app that is now the third most popular app in the health & wellness section. Pretty impressive popularity considering a modest user rating of three stars. Looking at the comments it is clear that WebMD rushed this product to market.

Makes one wonder if it was the slick demo of A.D.A.M. that WebMD saw at the recent Health 2.0 conference or hearing Microsoft’s announcement at the Connected for Health Symposium that a HealthVault iPhone app was to be released in near future.

Clearly, something pushed WebMD’s development group a little harder than they intended as it is hard to fathom that WebMD would release a product that is so flawed.

Biggest complaint: system crashes when using the symptom checker feature.

Perspective on WebMD’s 3rd Qtr Numbers

WebMD and Healtheon jointly announced earnings for Q3 (ending Sept. 30th) late this afternoon. Sat in on the conference call and pick-up a few tidbits of information to pass along. Comments will focus on WebMD’s operations.

Why do an analysis of WebMD?

Quite simply, they are arguably the largest market player in online health. This is a young market and WebMD is the only company that we know which provides some visibility as to market trends, which can be extrapolated across the broader industry (with maybe the exception of the provider market).

So what do we learn from this quarter’s results?

Total Q3 revenue was $100.4M, up a strong 17%.

Decent growth in an economy that continues to sputter. Health & wellness spending is continuing as companies seek new marketing channels for the advertisements and employers look to control healthcare spending.

In the driver’s seat is online advertising/sponsorships (almost all from pharma) which saw 22% growth and represented $72M in revenue.

Obviously, this is the goose laying the golden eggs and they see continued growth for this sector in the future, though they caution it will be modest. In responding to a question regarding size of the opportunity, WebMD stated that only 5% of the $5B spent annually on direct to consumer pharma marketing is online today so plenty of upside growth. Looking at physician drug marketing opportunity looks even bigger as only 1% of total physician marketing spend ($13B) is spent online today.

The troubling news here is that WebMD sees, in the near term, flat to slight contraction in total pharma marketing budgets, thus less to go around. The challenge fo WebMD and any online health business that looks to ad revenue is convincing advertisers that their money is better spent online. This may work well for those with strong Brand recognition (WebMD or some of the Waterfront Media brands) or those targeting specific conditions, but broad-based plays that lack focus and brand recognition will not survive.

Their “private portal” business (this is the employer and payer PHR/portal business) saw a revenue gain of 11% bringing in $22.1M. The number of clients increased 15% from 112 to 129 today.

They are not seeing the same level of growth here as they are seeing in advertising so future investment will match expectations (e.g., low expectations=low investment). The ongoing economic crisis is not going to make it any easier to get self-insured employers to invest in these types of solutions unless the vendor can clearly and unequivocally show real short and long-term savings via the use of their solution. Unfortunately, for most PHR vendors, they simply do not have the track record to show such savings.

Looking Ahead:

With a $336M war chest at its disposal, WebMD again reiterated that it will be shopping for “synergistic businesses” to drive future growth.

Expect acquisitions that give them more places to sell advertising, particularly to physicians as it is appears to be a relatively untapped market. BTW, they stated that they forecast acquisition(s) to occur between now and the end of Q2’09.

Side Note: Their relatively new Physician Connect website (competes with Sermo), has seen strong membership growth, 65K physicians today (in Q1 they reported 20K physicians as members of Physician Connect).

Pessimistic growth for Q4 of 4-8% over Q3.

Clearly, they are seeing some budget pullback, most likely across all businesses.

In advertising, it is the trimming of advertising budgets. For private portals, most likely lay-offs leading to fewer participants/employees using service.

Though signaling growth in 2009, their projections have such a wide variance as to be virtually meaningless. Expect much of 2009 growth to be the inorganic (results of acquisitions).

At this point, it’s anyone’s guess as to how 2009 will shape up in the online health market. Clearly WebMD does not have much visibility, and it is unlikely that anyone does as there are simply too many factors in play from the financial crisis, to a new administration.

For those with deep pockets, this may be a good time to invest to grow market share. Those with less in their pockets should look to deepen relationships with their existing client-base and focus resources on selling add-ons while awaiting a market upturn.

Google, Microsoft, Dossia & WebMD: Panel Highlights

One of the treats of this week’s Connected for Health Symposium was the opportunity to moderate a panel entitled: Personal Health Information Platforms and Records: What’s the Nitty-Gritty Situation on the Ground?

Obviously, I could not provide notes on this session while concurrently moderating it, but did find the following article at Healthcare IT News that provides some flavor as to what was discussed.

I began the session with broad questions targeted at all panelists and concluded my questioning with pointed questions to each of the participants. Following are the questions and their answers:

Google Health:

Ques: You currently only support a modified version of the CCR standard and do not allow for unstructured data in Google Health. Will you support other standards and unstructured data?

Ans: Yes, we do intend to support other standards including CCD in the near future. We are also building out the capabilities to support unstructured data.

Assessment: Good to hear that Google intends to support other standards and quite pleased to hear that they will be offering users the capability to store unstructured data (important for journaling, loading up advanced directives, etc.)

Dossia:

Ques: How will you support portability of the record should an employee leave their employer?

Ans: We intend to support portability of the employee’s record. As of today, we have not worked out a pricing model should an employee wish to maintain their data on Dossia.

Assessment: This is the same answer they gave me last year – obviously a back burner issue that Dossia has not spent much time on.

WebMD:

Ques: You are currently working with Dossia and now being rolled-out to Wal-mart employees. Do you intend to become a part of either the Google Health or HealthVault platforms?

Ans: We will become a part of these other platforms when there is a business case for doing so. (In other words: Only when a client asks us to do so and basically pays for it.)

Assessment: Seems logical and why commit to something that to date is still unproven and none of your large enterprise clients have asked for.

Microsoft HealthVault:

Ques: Recently, both Google Health and Dossia became members of the Continua Alliance supporting Continua’s open standard for medical device connectivity. Since biometrics is an important part of HealthVault (and its proprietary Connection Center), why are you not a supporting member of Continua?

Ans: Microsoft wanted to move faster then Continua to deliver a solution to market. We continue to follow what Continua is doing and will reconsider joining Continua at a later date.

Assessment: Yes, Microsoft is correct in that Continua has been moving slowly and understand that they may not have wanted to be hindered, after all, Microsoft now has over 50 devices that can feed data through Connection Center into an individual’s HealthVault account while Continua has yet to bring a single certified product to market.

That being said, Continua standard compliant products will start rolling into the market, en mass, in 2009. Continua gave a very impressive demo (at least for the audience as I was bored having seen similar device connectivity over ten years ago in the manufacturing space, but that is another story), including numerous devices, as well as an upload of device data directly into a Google Health account. Also, Continua is not expensive to join – it is only $5K/yr to become a “contributor” member, chump change for Microsoft.

Just can’t figure out why Microsoft won’t pony up a measly $5K to at least show support for the concept of Continua, unless of course they have every intention to make the Connection Center a lock-in solution. Do not believe this is Microsoft’s intent, but their position on Continua naturally raises suspicion as to their intentions. Hopefully, they will reconsider this stance and join Continua in the near future.

On another note – Microsoft did announce, while up thereon the panel that they have an iPhone app in the works that will be released shortly.  Can’t wait to see what that may be – stay tuned as we plan to dig deeper.

After my questioning I opened up questioning to the audience. The highlight was when someone asked when will we see interoperability between the platforms. This generated some lively discussion between Google and Microsoft with Google’s Jerry Lin finally saying to Microsoft’s Grad Conn that Google was ready when they are. To which Grad responded positively and said let’s talk after the session.

Don’t know what came of those discussions and regret not holding their feet to the fire in front of the audience and asking them when, specifically, will we see such interoperability. Guess that will have to wait for the next such opportunity.

Connected for Health: Day Two

8:00am, Keynote Regina Herzlinger, Professor @ Harvard and author of Who Killed Healthcare: Very good, thought provoking and at times funny presentation. If you ever get a chance to hear her present, do it!

Key points made:

  • Need to move to Consumer-Driven Health Plans (CDHP).
  • CDHP’s are crippled until we, as a country are able to provide cost and quality transparency.
  • Sees the role of government as similar to that of the SEC – set the guidelines and a clear regulatory structure and then get out of the way.
  • She’s a big fan of Switzerland’s healthcare program.

8:50am Panel Session: Giving Out Grades, Online Ratings of Physicians: Consumer’s Union, Angie’s List nd HealthGrades up on the stage. Some initial statements by the panelists, nothing really new out of Consumer’s Union or HealthGrades. Angie, of Angie’s List fame, the company recently rolled-out a physician rating service (hmm, wonder how doctors feel about being rated along side the Joe the Plumbers of the US), Angie readily admits that they are very much in beta for developing the physician rating service but already are seeing a tremendous amount of interest among their members.

Moving into Q&A with the panelists, hoping for something insightful.

HealthGrades, when they first started, had a lot of push-back from hospitals. That has completely changed as CMS is now doing hospital ratings and hospitals themselves are doing self-reporting of quality metrics, even publishing such ratings in local papers. Goes on to state that a the physician level, we are still very early in the rating game but foresees that like hospitals, physician ratings will become pervasive.

Based on the discussions, we are much farther along in rating hospitals than rating physicians. Pitched a question at HealthGrades based on personal experience and they did admit that it is still early (they introduced the physician service about 1yr ago). HealthGrades now has ~600K consumer provided physician ratings and are getting nearly 1,000 new ratings/day.

Consumer Union does not rate physicians at this tme and is looking for free consulting device on how they might provide such a service. As mentioned earlier, Angie’s List is in start-up, beta mode. Some of the safeguards that Angie’s provides is that no comments can be made anonymously, that they do have systems in place to insure that someone does not “game the system” and they send an email to a provider when a new rating/comment has been posted.

10:30am Clay Shirky Presenting: Basically an extended version of what Clay presented last week at Health 2.0 conference. Difference here is that he is presented to a much different and smaller crowd (plenty of physicians and academics at this event). Not quite as warm, on the edge of their seats, receptive audience as last week.

Argues that technology spreads socially. Thus one needs to observe social communities and what is being adopted then develop the capabiltiies for information flow that leverage what is popular for a population subset. Clay stated this in response to a question on addressing the digital divide. Simply, populations where use of computers/Internet is not prevalent, the cell phone is pervasive. Thus, we need to rethink ways to delver health information to these mobile systems (e.g., lab results, appt. scheduling, etc.).

3:00pm, Panel Session on the Consumer as Payer: Discussion is all over the map, which may be partially due to the panel make-up (Findlay from Myca Health, CEO at Dovetail, Dr. Gruber from J&J and CEO of Consult-a-Doctor).

Consult-a-Doctor: Pricing, $100/yr/member(consumer) for direct access to a doctor for second opinions. Go to market is primarily through payers and employers. Forecast they will reach 1M covered lives within the year.

J&J representative on the stage is very pragmatic. It’s all about making the consumer’s life easier. Believes all the big talk about changing healthcare is mis-directed. Need to look at the individual and what we can do to help them. Right on!

Question on regulatory environment, does it hinder expansion. Wolf Shalgman from Consult-a-Doctor sees a big problem with the disparate regulatory structure, at the state level. Other panelists did not bother to respond, though I know from talking directly to Dovetail, that it is a significant issue that hinders their growth.

3:50pm Panel Session on Getting Past 3% (basically how do we drive broader adoption of PHR-type services): Carol Diamond from Markle is moderating and we have Bosworth from Keas, Jamie Heywood, co-founder of PatientsLikeMe (PLM) and Craig Froude from WebMD.

Ask Craig what makes employer health platforms work. Craig stated that if you build it, they may or may not come, but if you offer incentives, they will show-up. Need to communicate very clearly to employees why you are doing it, what’s in it for the employee and most importantly, what will the employer do with your data. Transparency s absolutely critical to establish trust. Some mployers do it well, others less so. Employees typically like the reduce co-pays, versus straight cash-card like reimbursements.

Bosworth stating that technology is not the problem with regards to adoption. We have plenty of technology currently available to address privacy, security and interoperability.  Went on to state that Dept of HHS, Kolodner’s statement last week at Health 2.0 comparing the software interoperability issue to VHS vs. Betamax as a poor analogy (actually said it was simply wrong) as software is not a “hardened” product, but quite malleable to the need(s) of the end user/application.

PLM design requirement, all information that a consumer and a physician would need to collaborate wth regards to care must be able to be delivered in 2 web pages.  Another design concpet: assume that te consumers that use PLM are altruistic, that they do wat to contribute to the broader community and make the world a better place.  Jamie believe that in healthcare today, far too many companies ignore this very important factor, too myopically focused.

Craig just announced that beginning in Q1’09 any employee that leaves an employer who has been sponsoring their WebMD PHR will have the ability to port their employer-based PHR data to the direct to consumer WebMD portal, thus supporting full portability of the record, albeit within WebMD properties.  Craig considers this a big move for them.

Now the question is: Will they let me port that data out of WebMD in some come standard (CCD or CCR) to a Google Health or HealthVault.  Don’t hold your breath as yesterday during the panel I moderated, Craig stated that such would not occur until there was a business case and right now, they don’t see one.

BIG News: J&J Jumps into Health 2.0 Market with Acquisition

Late yesterday, Johnson & Johnson announced that they have acquired HealthMedia, an online health & wellness service.  HealthMedia positions itself as an online health coaching service and sells this service to employers (eBay, J&J, etc.) and payers (BCBS plans, Aetna, etc.). In their press release, J&J state that HealthMedia is the base for their “Wellness & Prevention Platform.”

This move by J&J is reflective of recent statements by senior execs that they intend to expand their business into new markets.  Clearly, with this move they are looking to the prevention market as the next opportunity.  One need only look at most trending data to see that this is a market with strong growth potential, albeit in the very early stages, particularly for online solutions.

But what really intrigues us about this acquisition is that J&J is one of the few companies in the market that has significant resources at its disposal to do a roll-up of a number of Health 2.0-type applications (something we commented on last week that is sorely needed in the Health 2.0 market) and provide a compelling value proposition.

Another thing J&J has going for it is consumer trust, and in healthcare, that is serious currency.

If J&J intends to indeed do a roll-up, which be believe they will to fully fill-out their Wellness & Prevention Platform, they will become a serious competitor to WebMD’s dominance in the payer and employer markets.

Stay tuned, as this is but one of many acquisitions that J&J will need to make to provide a complete and compelling solution.

Which leaves us with the $1M question:

Who’s now on J&J’s acquisition radar?

Connected for Health: Day One

Bouncing from the Health 2.0 event last week to Connected for Health Symposium here in Boston, organized by Partners Healthcare, I’ll be reporting on some of the key presentations. Will also be moderating the afternoon session on the major platform plays, Dossia, Google Health, HealthVault and WebMD who is not exactly a platform but certainly the 800 lbs. gorilla in the PHR market.

8:15am, Keynote: MA Senator and former presidential nominee John Kerry has taken the stage. Kerry wastes n time in hitting McCain hard on his healthcare policies. Under current administration, healthcare premiums have gone up 78%, Starbucks spends more on healthcare than coffee, GM spends more on healthcare than steel. Not exactly the fault of the current administration, but Kerry wants to put it on their doorstep though it really needs to be put on the doorstep of all branches of government.

Kerry now talking about the lack of effort in promoting prevention. Reflected on his own cancer story, prostrate, which was caught early. “Healthcare system is overburdened due to the stupid choices we make.” We do not focus on prevention where the real savings are.

Kerry went on to claim that the recently passed legislation to promote adoption of eRx as the most significant healthcare legislation passed in recent history. Even mentions the good work of Newt Gingrich claiming he was instrumental in getting the eRx legislation through Congress.

Moving on to Q&A with Kerry. Asked about physician rating services. Believes it is necessary that accountability is needed in medicine and would like to see the medical profession do a better job of policing itself. Does not want to see the government step in to do this as they will not do it well. Sees healthcare as not under-regulated, just poorly regulated. Takes a shot at CMS claiming it is extremely opaque and not terribly effective. Lays partial blame on OMB, which sets a number of the rules. Does not want the government to take a heavy hand in regulating healthcare as he is concerned that this will stifle innovation.

Question: With the current economic crisis unfolding, will this put healthcare legislation and change via a new administration on the back-burner? Kerry: we are in a deep financial crisis that will led to the next president’s primary task being the establishment of confidence in the market. That must be addressed first before we can move to other important issues. Sees the need for government to invest directly in the economy, e.g., healthcare, infrastructure, etc.

Ques: How can government foster EMR adoption? Kerry rattles of some statistics on Partners’ HIT adoption. Kerry then goes on to give the bromide of we need interoperability.

Ques: How can we get some of the senators holding back HIT legislation to move forward? Kerry stated that security and privacy are a key issue that is hindering movement on this legislation but points to examples in other markets that privacy and security can be adequately addressed.

Kerry closed by expressing great frustration wit the OMB scoring of legislation process – a process by which proposed legislation is evaluated by OMB as to its potential impact. Kerry strongly stated that OMB looks at just costs but does not give a fair shake to potential savings.

Note: Kerry, with Gingrich and Billy Beane had an Op-Ed in the Sunday NYTimes.

8:45am Next up: Susannah Fox from Pew Charitable Trust: “Participatory Medicine” Starts off with a PR from 2001 where the AMA cautioned consumers from going online to get healthcare information. Obviously, consumers have ignored this AMA, protect our turf, statement. 12% of Internet users participate in online health communities and nearly 25% of those between ages of 18-39 use one of these communities.

Pew research has found that about one third of those who go online for health information have been helped in a significant way. Only about 3% have actually been harmed. Order of magnitude difference. There research has also found that the first line of information inquiry by a consumer is a physician (roughly 80%).

Argues that healthcare is stuck in the broadcast world – information targeted at you and not include you is a dated model that healthcare sector is still using and will not work in the future. Consumers will look elsewhere to the risk of healthcare incumbents. Encourages the healthcare sector to open up and share information more aggressively, actively engaging the consumer. Get the consumers to participate, not just observe.

Pew breaks out population by: Elite tech users (31%), mid-range (20%) and low tech (49%). Online cancer forums are 96% white and over 75% with a college education (UNC study). Argues Web 2.0 is not being used by the vast majority o Americans today (clearly, if those stats are to be believed). Engaging the low tech community (particularly Latinos and African Americans) are highly connected via their cell phones. mHealth is where it is at to engage these communities.

Her seven word challenge/closing:

Recruit Doctors, Let e-Patients Lead, Go Mobile

Do not listen to AMA from 2001, do not take a closed aproach and do not end up in the same boat that the recording industry was left in when consumers went online for music. Get out there and actively engage consumers wth regards to their health. Make it participatory medicine.

10:00am Panel Session on Primary Care and Coordinating Chronic Care: Panelists include George Chadraoui, IBM Healthcare Benefits Leader, David Hom, formerly of Pitney Bowes (he played a leading role getting Pitnet Bowes to sign on to Dossia), Edwina Rogers, Dir. Patient0centered Primary Care Collaborative and Vince Kuratis, of Better Health Technologies and blogger – e-CareManagement.

Main focus seems to be on the concept o the “Medical Home” Rogers sees a very large growth opportuntiy fr “disease management” companies to tap into the Medical Home concept delivering services to primary care physicians to enable them to do better chronic care mgmt. Hom, sees 24/7 telemedicine coupled to incentives and the PCP (primary care physicians). to make this all work. Unfortunately, what Hom is seeing today is proliferation of a multitude of messages being sent to the consumer and simply overwhelming and confusing them. Vince makes an astute observation that CMS (Medicare) is putting the onus on the PCP for chronic care mgmt whereas in the broader market health plans are delivering /handling much of the load.

Medicare is looking at reimbursement models of $30 to over $100 chronic care mgmt. Rogers sees this as providing some significant funding to chronic care mgmt concepts and innovators. Hom counters that there is still high degree of fragmentation, most often created by health plans. Hom sees PHRs as having the potential to bridge many of the gaps and fragmentation today. But Hom goes on to state that the proliferation of solutions arriving in the market is making the decision process as to what solution to chose far more difficult which may stunt overall adoption.

Issue raised, the continuing and growing problem of shortage of PCPs to actually implement the medical home concept. Rogers comments that if we can realign incentives and make it worthwhile for med students to pursue a PCP occupation, we will not have a shortage.

11:00am Panel on Wireless and Mobile Services for Connected Health: Check the agenda at the Symposium website for panelists (Verizon, Qualcomm, WellDoc and Sensei represented). How is the iPhone & smart phone technology facilitate care. 200M iPhone apps have been downloaded to date, per Jobs Q3 call last week. Represents nearly $1M/day in spend on iPhone apps. Cell phones tend to be very personal, portable devices that have become extremely pervasive. Cell phone operators are finding that children’s use of SMS is forcing parents/older generation t use this technology.

Interesting question by the moderator: When will large sophisticated health organizations such as Partners will automatically update your PHR via a cell phone/wireless when you pay a visit to a Partners’ physician. One respondent, the financial services industry is moving forward on this type of concept, but the healthcare industry is not. That being said, healthcare has many of the similar concerns as the financial market. Another counters that we need to walk before we can run and unlike financial sector, healthcare is very fragmented and HIT adoption is likewise fragmented at the physician practice level.

Sure is and market forces may start to push the envelop, though it will be excruciatingly slow, thus most likely to occur outside of the traditional healthcare sector/practice and bubble up via consumers just moving ahead leaving many physicians behind. Believe this was also the message that Susannah Fox was trying to convey to this audience.

Panelist just confirmed what I put in italics above.

Metric: $100B/yr in revenue generated worldwide for cell phone operators from SMS/texting.

The business model or mHealth: A value proposition needs to be created for the consumer that will actively engage them. Needs to be a highly personalized interaction thus needs strong intelligence to identify what is imortant to a given user and delivering only what is of interest to that specific consumer. SPAM, adverts, etc. will not work on a mobile device – something that consumers will not tolerate. Regarding the scaling of mHealth, one panelists sees Wal-Mart, India and new health gaming-type apps as driving future growth. Another panelist encouraged developers to go directly after payers, they are the ones with deep pockets and need (No Duh!).

Keep waiting for something interesting, nothing out of this panel, just more substantiation of what has been said before in other venues. But hey, I’ll cut them some slack as maybe for this audience its all new.

2:15pm, Panel Session, VCs Talk About Who will Make $$$ in Connected Health & Why: Pack house for this session, standing room only.

In New England region about 20 investor (angel) groups. They meet monthly to consider investment options. They are finding that the VCs have really pulled back on investing in the last month or so. Encouraging companies to have a Plan A & B Plan A we come out of the financial crisis in a year or so. Plan B, financial crisis and tight credit markets continue for 2-3 years. Finding it very difficult for new start-ups to get money, slightly easier to get $$$ to scale-up.

VCs looking for cash efficient companies and models that will quickly get them to cash-flow positive in a far shorter period of time than in the past. Contraction – looking to place fewer rounds in any given entity. Nationally, VCs raised $30B in capital in 2007, for ’08 looking at $20B and for ’09 roughly $16B (half of what was available in ’07). Project high mortality rate for many existing VCs. Advising companies that they need to significantly decrease burn rate to survive the next 12-18 months. There will be very little new money to go around. Don’t over-engineer the product, focus on only those features that are absolutely needed for a product to gain traction.

Start-ups need not show near-term profitability but do need to articulate a clear commercialization model that shows a path to break-even in 3-4 years. So it is not so much an issue of profitability now, but demonstrating a good model to get you there.

Warning, next 12-24 months will be very hostile.

Business models that seem to be working…

Recurring revenue models focused on a B2B2C model. The B2C model is not attractive to VCs. This is not unlike what I observed and commented upon last week at the Health 2.0 event.

One of the VCs is seeing too many companies that say: “Hey we have a great product/service for payers, providers, employers, etc.” This actually turns this VC guy off as he is looking for companies that demonstrate focus and are not trying to tackle numerous markets and subsequently, trying to develop numerous channels. Just won’t get to profitability fast enouh in his tight credit market.

Big problem for VC firms today is liquidity in the market to provide them an exit strategy. Right now, VCs have very few exit options which severely constrains their model and thus cascades into their ability to fund new ideas/strat-ups. About the only exit strategy today is mergers or acquisitions.

None of the VCs on ths panel are terribly interested in Health 2.0 apps. More interested in new diagnostics that can be used by small practices and remote monitoring/sensor apps. See good opportunities here. Another is also looking at genetic testing, genomics & personalized medicine.

5:45pm Continua Alliance Demonstration: Currently, they are running through all the various companies that are a part of the demo, a literal who’s who including IBM, Oracle, Google Health (they along with Dossia recently signed on to Continua, Microsoft HealthVault is now the odd man out here), a number of mostly small device vendors with exception of Philips who will demo their new Mtiva platform for remote chronic care monitoring.

First demo has an “elderly woman”, Natasha, taking simple vital sign measurements. Very simplistic GUI. Next, a remote caregiver, using Motiva, clearly shows Natasha’s trending data for evaluation. Caregiver sees a disturbing trend (weight gain) and pushes data to a physician. Physician now takes the stage, logs in and sees a new report has arrived (Natasha’s) for review. Shows simple data fields in columns – surprisingly does not appear to demonstrate any analytic capabilities to pick out what may be outliers in the data set to quickly flag data/areas of concern. Yes, this may not b an area that Continua is focused on – they focus on remote device data interoperability. Still would expect more in such a demo. Odd.

Demo 2 has a consumer with type 2 diabetes and obesity. He takes various vital measurements (weight, glucose), records them and data is automatically pushed to caregiver. Caregiver reviews data and using Continua format (its a combination of IHE & HL7 CCD standards), pushes data to the consumer dietitian and the consumer’s Google Health account (hmm, Google doesn’t support CCD yet, so how did they do that?)

Both pretty simplistic demos that came across as more of a stage for all the various Continua Alliance partners than really doing something interesting. Continua is now about 2 years old so they have made some good progress on device interoperability and I’m sure there will be more interesting applications next year.

Signs of Times: Healtheon Pulls WebMD Merger off Table

Back in February of this year, Healtheon and WebMD announced that they would merge.  At the time, our analysis was that the new combined entity would become more attractive for as an acquisition target.

Well, that is not longer the case as this morning, Healtheon and WebMD made a joint announcement that the merger has been called off.

Quoting from the press release:

Martin J. Wygod, Chairman of the Board of HLTH and of WebMD, commented: “The Boards of Directors of HLTH and WebMD believe that, in the current economic environment, it is important for a growth company like WebMD not to be encumbered by $650 million in long-term debt that would be coming due in 18 to 36 months. By terminating their merger, HLTH and WebMD will retain financial flexibility and be in an advantageous position to pursue potential acquisition opportunities expected to be available to companies with significant cash resources in this period of financial market uncertainty.”

The Boards also took into consideration the fact that the sale of Porex has been delayed as a result of one of the leading potential buyers having difficulty arranging financing for a purchase because of conditions in the credit markets. HLTH is continuing its sales process for Porex with other potential buyers, but cannot provide assurance as to the timing or terms for a transaction.

In light of current economic turmoil and tight credit market, this appears to be a wise move.  Also, with nearly $340M in cash and investments on-hand, WebMD can now be on the prowl to pick-up a company or two at bargain prices as many will be on the ropes.

Where’s the $$$? or Economic Meltdown and HIT

This morning’s Wall Street Journal has an article, first page – Section B, highlighting the growing impact of the financial crisis on the IT industry. The enterprise software powerhouse, SAP, shocked investors earlier this week when it warned that it would not meet its 3rd Qtr target, citing slowness in the mid-market. Another tech company, RightNow Technologies (provides an SaaS CRM solution) also announced that they are seeing delays on invoice payments. And getting back to the WSJ article, VC firms are having a tough time raising capital and are have begun telling start-ups to batten-down-the-hatches for a long slow period. Some have even gone on to say to their start-ups that if you have a bank credit line, draw it down now as it may not be there tomorrow.

Impact on Healthcare IT (HIT) Spending

Adding to the tight money situation for businesses of all sizes, regardless of market sector, decreasing consumer spending and the increasing burden of healthcare costs shouldered by consumers will directly impact healthcare. Small to mid-size physician practices will be particularly hard hit as consumers forgo visits. This will, in-turn, slow technology adoption for the foreseeable future and result in drastic consolidation among HIT vendors.

And for those of you holding out for one of the presidential candidates to drop a boat-load of money into HIT, don’t hold your breath. During a debate last week at Harvard, two noted healthcare economists each representing one of the candidates (they were both senior advisors to teh candidates) were quite clear in stating that any promises of large investments in HIT will have to wait while other priorities take precedent.

Despite all the doom and gloom, occasionally one sees a glimmer of brightness. IBM this week pre-announced earnings (to quell market concerns) that were positive. And this morning, I received a similar announcement from WebMD, wherein they state that advertising revenue for the third quarter is up substantially, year over year. Like IBM, clearly WebMD wants to get out in front with positive news to quell investor fears rather than wait till their scheduled 3rd Qtr conference call on Oct. 30th.

Quick Assessment:

  • Mid-market HIT vendors targeting physician practices will suffer. Expect consolidation, bankruptcy filings and even shuttered doors. Vendors targeting large practices and hospitals will rely heavily on maintenance and service revenues as customers look to control spend by canceling or delaying large projects.
  • There are far to many integration platform vendors targeting the RHIO/HIE market. Most of these will fail. Those that succeed will have a strong, existing client-base (not heavily reliant on RHIOs) with a clear annuity stream to carry them through what will be a tight market for the next 2-4 years. Those with a clear technological advantage will likely be acquired.
  • The consumer-facing HIT vendors will have little success going directly to the end consumer. Thus, their go to market strategy must migrate to a B2B2C (business>business>consumer) model. In pursuing such a strategy, they must show clear and demonstrable savings to the business sponsor. Creative financing and cost sharing approaches will increase to fund such deployments.
  • Internet-based, consumer-facing health solutions, particularly anyone claiming to be “Health 2.0” company must go beyond the hype and focus on delivering some real value that they can monetize. PatientsLikeMe appears to be on the road to success, far too many others to list do not. A real shake-out will occur here as these start-ups struggle to raise cash.
  • Whether one likes it or not, clearly, there is money in advertising but tapping that source will require a company to show that they have the visitors and are growing in number of impressions. That growth should exceed overall growth in health-related search. WebMD is one clear example, Waterfront Media another and eMarketer lists a few more.

Quick Note:  Just found this article over on CNET that takes  hard look at Web 2.0 companies with the potential to blow-up.  Hmmm, if one were to make a similar one for the Health 2.0 apps sector, who would You put on the list?

Thoughts from Across the Pond

The European division of Cisco sponsored the publication of an EU-centric healthcare report, Connected Health. A collection of 10 essays from across Europe and even Dubai, the report provides some interesting concepts and ideas regarding technology (IT) adoption and use. To quote the German Commissioner for Telematics, Rienhold Mainz:

“Patient-centred care implies seamless healthcare delivery between different healthcare industry sectors. To ensure this, any patient-related data has to be available “just in time”.’

Essays provide a nice mix of policy and practicum and though this is a 120pg report, it can be read quite quickly.

There are certainly some lessons for the US tucked within these essays as several EU countries are farther along in rolling out HIT. That is not to say all is easy as they do struggle with many of the same issues as we do here. For example, the aforementioned German essay has an interesting Table on pg 68 comparing the Government’s HIT strategy, which puts control of medical records into the hands of the consumer, to that of independent healthcare providers who wish to maintain continuity of the record and apparently, control. This challenge is similar to what we face today in the US, particularly with the adven entrance of Google and Microsoft into the market. A common refrain from the provider community is:

If we give consumers control of their records, will we be able to trust the record at some future point of time? Will the record be truly representative of the consumer’s complete health record? What liabilities might I be subjected to if I make decisions based on the PHR?

Sean Nolan, Microsoft HealthVault’s chief architect (and certainly many others at HealthVault), struggle with this issue on nearly a daily basis and today, there are no easy answers.

In a couple of short weeks at the Connected for Health Symposium here in Boston, I’ll be moderating a panel that takes a good hard look at where we are today with the major personal health platforms (Dossia, Google & HealthVault) and WebMD on the panel. As the symposium audience is strongly represented by large providers, this is one issue that I’ll be looking to explore further with the panel.

The Revolution is Over

The New York Times reported yesterday that Revolution Health Network is expected to announce sometime today that they will merge with Everyday Health. Looks like a pretty lame marriage, but probably the best that Steve Case’s holding company, Revolution LLC, could get for this online property as it is an ugly bride.

The official PR from Everyday parent, Waterfront Media gushes profusely about how the combined entity will deliver all sorts of value to consumers. Granted, the combined entities, now under the Waterfront Media banner, will be able to offer advertisers 24 different online properties where they can flog their wares on the hapless consumer (hey, someone has to pay for this free advice).

What I found particularly interesting is that Revolution LLC (Steve Case’s holding company) is not so much selling his Network to Waterfront, as he is investing in Waterfront Media. NYTimes puts the value of the deal at $300M. Revolution Health Network is maybe worth a tenth of that amount and Waterfront had revenue of just $50M in 2007. Looks like Steve decided to let someone else run this business, but he will keep an eye on it as he gets a a couple of seats on Waterfront Media’s Board of Directors.

My favorite in all this story though is the quote by Steve in the NYTimes:

“We think we have the wind at our back, and can pass them,” said Steve Case, Revolution’s founder, referring to WebMD. He said the combined company could “really be the new leader in this category, which is a hot category.”

I for one am not holding my breath Steve. That is not to say WebMD isn’t vulnerable, it’s just going to take a lot more than this shotgun wedding to overtake them. And Steve, a little bit of advice: If you don’t know which port you are heading for, any wind will do.

WebMD Targets Marketing with QualityHealth Acquisition

Anyone who has listened to a recent WebMD quarterly results webcast clearly understands where WebMD sees growth. Not too surprisingly, it is not PHRs via customized portal solutions for payers and employers, despite them having over 250 clients including such household names as EMC, IBM, WellPoint and numerous BCBS plans.

No, it is in advertising and marketing. WebMD sees a big opportunity here as healthcare companies, particularly drug companies, look for new approaches to reach the consumer beyond traditional media. Being the number one site for healthcare content with clear Brand recognition, they have a commanding lead on their competitors, something Revolution Health could not overcome despite all the $$$ invested.

But on the Internet where everything moves at a frenetic pace, such leads may be fleeting even for a company like WebMD, who must constantly look over their shoulder. With both Google and Microsoft getting into the consumer healthcare market, WebMD’s long-term prospects are not assured and vigilance and aggressive moves will be necessary.

One such move is the announcement this morning by WebMD to acquire QualityHealth.com and parent company MTS Corp. MTS (Marketing Technology Solutions) is just what its name implies, a company designed to offer healthcare companies (primarily drug companies) a channel to the consumer market, that channel being the QualityHealth website, though they do have other Internet properties as well including Nubella, a nutrition specific site and Healthpages, a yellow pages like directory for finding healthcare service providers.

The QualityHealth website is just another one of those cluttered consumer-facing health content websites with an amalgamation of health related news, a number of health related tools, e.g., the all too common BMI calculator, some social communities (which were deceptively poor – lots of cross-posts to make communities seem more active than they really are) and of course, advertisements everywhere. More duplicative of the existing WebMD and not as well executed. Taking a look at traffic statistics on Quantcast and comparing them with those of the recent post on Everyday Health, QualityHealth ranks fourth not far behind the sinking ship of Revolution Health.

So why would WebMD acquire such a property?

First, MTS has a nice list of clients and partners that WebMD can further leverage across numerous properties. Secondly, MTS “claims” to reach 9 million consumers per month via its three properties. Third, MTS has an internally built analytics, rules-based engine for targeted ads and promotions that WebMD may find some value in. Fourth, and maybe most important, we are seeing consolidation in the broad category of consumer healthcare sites as there are simply too many in the market today and traction is waning. Fifth, WebMD got a good price for MTS.

Why a good price?

Looking quickly at the MTS properties via compete.com, one sees that though the QualityHealth site is seeing growth, the other two properties are virtually stagnant over the last year (first figure below). Secondly, when one looks at average length of stay at these properties as well as page views, each important metrics to assess stickiness of a site, these properties are stagnant or worse slipping.

Bottomline:

Expect further consolidation in the market as larger players with deeper pockets (e.g., media companies, established Web properties and others) pick-up those with an established presence, a client base and stagnant growth.

Update:

WebMD paid ~$50M for MTS which reported sales of $21M in 2007.  Assuming modest growth in 2008 puts sale at roughly 2x revenue.  But WebMD will pay a bonus of $25M if certain performance metrics are met.

Everyday a Revolution Health or How 1+1=1.5

The Washington Post had a brief article yesterday of a rumor that local Health 2.0 darling, Revolution Health is in merger talks with Everyday Health.

Based upon my cursory review of Everyday Health and knowledge of Revolution Health, these two look like a carbon copy of one another – lots of female targeted ads, simple content on dieting, some social networking/community capabilities and even simpler tools for health management. Thus, such a merger will unlikely result in a 1+1=3 scenario where each brings something unique to the other, but more of a 1+1=1.5, were the value is in the small uptick in number of users/impressions that can then be sold/marketed to advertisers. But even here I see very little value in this merger. One need only do a quick comparison of the demographics of users visiting each site (here, I’ve done it for you: Everyday Health and Revolution Health) to see that there is a huge overlap.

Which may not necessarily be a bad thing, at least according to a recent comScore PR. According to comScore the healthcare information content category is growing 4x the Internet norm. Having listening to the last couple of WebMD quarterly conference calls, there is certainly a lot of money to be made here as companies look to tap into the growing trend of consumerism in healthcare. One particularly “hot” market opportunity are all those pharmaceutical firms who are looking for new ways to reach and educate the end consumer beyond traditional media.

WebMD is the proverbial 800-pound gorilla in the market and the strategy here may be to simply combine forces to more effectively compete against WebMD. As the figure shows, however, even combined, these two will still trail WebMD in impressions. (Note, I used Quantcast, one of many Internet traffic tracking solutions and ther numbers may not match up with others.) Pretty weak justification for a merger, unless of course one of the parties (Revolution Health) is making the offer so sweet (little or no cost to Everyday Health) to be too tempting to pass up.

Leading with Page Views Not a Promising Sign

Any Quarterly Announcement press release that leads off with anything but the financial numbers usually signals trouble. WebMD is no exception.

Just got off the WebMD first quarter conference call. Knew it was going to be one of those calls that did not have cheering from financial analysts as they began their questioning with something to the effect of: ” Great results, you really are hitting your numbers, yada, yada, yada…”

No, this was going to be subdued as the company gave everyone fair warning with a pre-announcement that advertising revenue is expected to not grow as fast through 2008 as originally forecasted.

In the call today, WebMD honchos were quite pleased with the number of unique visitors in Q1, now at 51.9M/month, nearly a 25% increase over last year. They were so please with these numbers, they used them as th title for their Q1’08 press release. This translated into overall revenue up 17%, with advertising up 23% while what they call “private portals” (which is really their PHR solution) growing at 9% year over year.

Looking Closer at WebMD PHR Performance in Q1’08

Digging a little deeper into what was said on the call regarding the PHR solution, WebMD saw the number of clients grow from 103 to 122, an 18% growth rate. But if client growth is 18% and they are only experiencing 9% revenue growth, it would appear that they are seeing some significant pricing pressure in the market. And that 18% growth in new clients is substantially below most of their much smaller competitors. Granted, it doesn’t take many clients to boost the growth of small competitors, but when I hear from one PHR vendor that they have had a doubling in the number of clients in each of the preceding two years and now have nearly triple the number of clients as WebMD, it makes me begin to wonder if WebMD is really capitalizing on the growth that is occurring in this sector.

Another thing I found disturbing in the call was the lack of discussion about WebMD’s initiatives in the PHR space. They discussed the competitive solution to Sermo, Physician Connect (now with 20k physicians registered), they talked about expansion overseas (not very informative and what they did divulge was not all that great), they talked about how popular their new magazine, WebMD is (even though the publishing group is still bleeding $$$) and they discussed Health Check, (they claim it is a success, but honestly, I don’t see it and they were not specific as to what metrics they were using to define success). And they spent a lot of time talking about a bunch of student loans they are holding and haven’t been able to sell at auction leading them to having to take a $27M impairment charge (geez, even these guys got caught up in the whole financial mess). The only mention of the PHR (private portal) business was a simple statement on growth, some new clients (Walt Disney and Newell Rubbermaid to name a couple), but no talk about how they are improving this platform, new initiatives, strategies to further penetrate the market. NOTHING!

Really makes me wonder if they are just milking this cash cow and looking for opportunities elsewhere that will be easier for them to defend in the future as the PHR market becomes increasingly more competitive.

Walgreens Ups the Ante in Retail Health

Yesterday, mega-pharmacy chain Walgreens announced that it will acquire I-trax and Whole Health Management. With this acquisition, Walgreens is moving beyond its recent venture into retail clinics in its stores, to clinics hosted on-site at major employers.

walgreens2.jpgThe adjacent figure, which I found in their investors’ presentation, makes it quite clear that Walgreens is moving beyond the pharmacy model in delivering care to the consumer and could well become a major competitor to more traditional care providers such as physician practices, hospitals, etc.

walgreens1.jpgBased on Walgreens’ numbers, it also looks like an attractive market with a lot of upside growth opportunities.

Both I-trax and Whole Health Management have created a wide range of service offerings for the delivery of care and each have an impressive list of clients (in excess of 180) that include BMW, Continental Airlines, Disney, Goldman-Sachs, Nissan and Toyota. Both acquired companies provided very similar on-site health services including primary care, pharmacies, health risk assessments, disease management and wellness coaching.  In acquiring these companies, Walgreens extends the Brand from your neighborhood to your workplace and gets a jump on both CVS and Wal-Mart, who are each still focused on in-store health service offerings.

One of the interesting aspects of the two acquired companies is that when I looked through their respective websites, I did not see any references to digital health records, in particular Personal Health Records (PHRs). Curious as many PHRs in the market today have offerings that include health risk assessments, education, disease management, in short, similar offerings, albeit via the Web, that I-trax an Whole Health are offering.  This got me to thinking about a previous post I did on whether or not WebMD was an acquisition target nd if yes, who potential suitors might be and why. I did get a harsh comment on that post, but maybe “Jake” also missed something. There are a wide range of potential suitors for WebMD, including one of these large retailers.

For example, a company like Walgreens could see a lot of upside by adding WebMD to its stable of offerings for employer clients. WebMD would bring additional employer clients, an Internet-based service that dovetails nicely with existing solutions and another vehicle for branding and marketing. Then again, a company like CVS or Wal-Mart might also benefit. So, add another one to the list of potential buyers for WebMD. Would give these three a medium-high probability of acquiring WebMD as the synergies are certainly there, particularly for Walgreens.

Will You Still Need Me, Will You Still Feed Me…

There are any number of statistics that one can point to telling us we in serious trouble. From the epidemic that is obesity to the persistent climb in diabetes cases and let us not forget Alzheimer’s, a disease that cripples many an elderly adult and is projected to rise to some 16 million cases in the US as baby boomers age and fall victim.

The future will be extremely challenging for both those suffering with these diseases as well as the caregivers who look after them. Numerous tools and platforms are being developed to help assist one in managing their or a loved one’s care, but they tend to be islands unto themselves. Personal Health Systems (PHS), such as Dossia, Google Health, HealthVault and maybe even RevolutionHealth and WebMD have the potential to provide an integrated service, but we’re still several years away from that becoming a reality.

While I do research and write on the the topic of consumer-centric healthcare technology and the desperate need to change perspectives from one that is patient-centric to one that is consumer-centric, there are others who search for the keys to health, such as genetic markers for Alzheimer’s to help us avoid falling victim to such diseases in the first place.

In the brief clip from a local cable network, Alzheimer’s research at Mass General Hospital is highlighted. Proud to point out that my son, who recently started working in this lab, makes a cameo appearance (he’s the one behind the scope).

HIMSS – Part Deux

Back home from my two day whirlwind tour of HIMSS. Here’s what I have for you from Day Two.

Significantly slower on Tuesday, though it did pick up later in the afternoon. So was everyone out playing golf or hanging out by the pool before the rain set in, or were they at one of the educational sessions? Hard to tell, but there sure were a lot vendors just sitting around not even trying to look busy.

Microsoft

Had a good briefing with Microsoft. Couple of quick stats for you:

  • Over 4,700 downloads of the HealthVault SDK to date.
  • Have some 100 signed partners that intend to provide a personal health application leveraging HealthVault. Big focus in 2008 is getting these providers live. Sure hope so as so called demos in exhibit area were weak.

As a follow-up to yesterday’s announcement on the $3M Be Well Fund that Microsoft is sponsoring, Microsoft is putting some pretty tight guidelines on it. First, they are really looking to fund innovative ideas coming out of academia and other non-profits such as health advocacy groups. Second, proposals have to be in by May 9th, awards announced July 1st and product ready for demo in October. Will be extremely interesting to see what this produces.

And just in case someone did not see the PR, Microsoft had a HUGE one page ad announcing the Be Well Fund in both yesterday’s and today’s WSJ. Prime spots as well.

I’ll provide a longer post addressing the Microsoft briefing later this week.

HIMSS & PHRs

In just another example of HIMSS’s seeming indifference to patients as consumers, went to the HIMSS session (sponsored by the HIMSS PHR sub-committee), Personal Health Records: An Industry Update from Various Perspectives. It was awful. Information presented was superficial and dated and seeing as only one person presented, hardly from various perspectives. Really a shame as there was quite a large audience (over 200) in attendance who deserved better than this for their time spent.

Hey HIMSS, take a look at the aforementioned Microsoft ad wherein Microsoft states, and I quote, “..innovative health applications that accelerate connections between consumers (my emphasis) and physicians and the information they need to make informed decisions.” and get a clue. This is where the train is headed so get on board or be left at the station.

More RelayHealth

Yesterday, I mentioned the physician centric PHR company RelayHealth (parent McKesson). Went back there for continuing discussion with their VP of Consumer Solutions, Ken Tarkoff who informed me that they have nearly 1M consumers using this PHR. That may very well put RelayHealth at the top, in terms of users, and ahead of the likes of WebMD. It is a compelling solution, though not sure how RelayHealth customer Aetna will combine it with their own ActiveHealth Management PHR solution.

ICW-Global

Learned more about ICW and their LifeSensor PHR. Interesting company that has seen success in Europe, but despite being in the US for a few years now, as seen very little traction. They did win Memorial Hospital in Rhode Island late last year, and another small hospital on the West coast – so maybe they are finally getting serious, we’ll have to wait and see.

Seeing as ICW has had such little success with LifeSensor in the States, I wrote them off. After visiting their booth and getting an initial briefing, my judgment may have been hasty. Quick review:

  • Their motto Don’t reject, connect. Big into promoting interoperability and announced the eHealth Foundation with founding partners Sun and Agfa. Was told that several others intend to join. Might one of them be Siemens?
  • ICW has over 650 employees worldwide.
  • They have established numerous partnerships many of which are with medical device suppliers for device connectivity to automatically populate one’s PHR.
  • Multi-lingual capability (English, German, French, Russian and Bulgarian).
  • Deep domain expertise in the use of Smartcards. Great platform for a “911 card” but little adoption in US. If that changes, (don’t hold your breadth) ICW is well positioned.
  • They offer their SDK to anyone interested in developing apps for the LifeSensor platform and have established an ICW Developers’ Network, (IDN) to support such development efforts. For the IDN, ICW hosts an annual developers conference to share best practices, learn about ICW’s product roadmap, etc. and hosts an online forum for continuing interaction.

Despite all of this, I still have some reservations about ICW as they have yet to prove themselves here in the States and this market is not getting easier to enter, particularly with Google now joining the ranks of PHR providers. ICW is staffing up operations in the US and indeed they could begin making a mark, but their execution in the field will need to be near perfect. Certainly a company worth watching and tracking as they do have quite a nice solution with some distinct differentiation.

Coolest Demo of the Day

Last but not least on the cool technology front was getting a demo of the MiCard from founder and president Tracy Evans. MiCard is this little credit card sized storage device (1GB) with a small screen that one can scroll through. MiCard has partnered with PHR provider NoMoreClipboard who together will sell this prepackaged solution at your local pharmacy or online for ~$130. BTW, NoMoreClipboard – nice PHR solution, too bad their marketing doesn’t quite match-up. Regardless, another PHR vendor worth watching closely, interesting technology under the hood.

Here’s how it works. Consumer gets a subscription to the online NoMoreClipboard where they can create a PHR and simply download information (emergency info or everything) through the mini USB port into MiCard. Once on MiCard, information is in read-only mode and one can quickly scroll through the record with simply up/down arrows on MiCard.

Great idea for emergency situations as it provides PHR info, without allowing direct access to one’s online PHR. And unlike the common USB solutions of today, EMTs and doctors don’t have to take the risk of pluging a USB into their network to see critical information. It is all easily accessible and viewable on MiCard. In addition to direct to consumer sales via pharamcies and the like, Tracy stated that physician practices are also buying MiCard to give to their customers for free as an added value service.

Busiest Booth

Google continues to attract quite a crowd, which can either be a boom or a bust to their neighbors.  Boom for it brings foot traffic.  Bust for it is difficult for someone to even get past the Google crowd and to your booth.  Pretty savvy on Google’s part to go with a small booth.  Having a bustling crowd always attracts attention from afar with passers by wondering, hmm, wondering what’s happening down that aisle – think I’ll go take a look, which of curse just brings more on-lookers.

Lesson Learned

Lastly, number one lesson learned, stay for at least three days as there is no way to sufficiently see everything at HIMSS in any less than that.

With Merger, Is WebMD Now in Play?

This morning, along with announcing very good 4th qtr growth at WebMD, a concurrent announcement was made that Healtheon and WebMD have agreed to merge, putting the value of the combined entity at about $2.3B. Due to the structure of the deal, WebMD will also end up with a hefty war chest estimated at $700M.

While I am no financial analyst, what I do know is that the past ownership structure of WebMD (84% owned by Healtheon) made WebMD a difficult acquisition target. Now that the two have combined WebMD may become much more attractive to a potential suitor.

WebMD is an attractive property for a number of reasons including:

Brand Recognition – They are the 800 pound gorilla in the personal health and wellness market, no one comes even close in numbers of page views and unique visitors.

Customers – WebMD has a long list of enterprise customers, both employers and health plans that is the envy of the industry.

Hot Market – Seems like everyone is clamoring for a piece of the action in the personal health and wellness space including the big boys Microsoft and Google.

Cash – A $700M war chest is nothing to sneeze at.

So who will come courting? Some likely suspects include:

RevolutionHealth could benefit with some added breadth and depth from WebMD and would love those WebMD customers. Also, WebMD had a relationship with AOL (discontinued last year) and RevolutionHealth is run by former AOL head, Steven Case. There will, however, be a lot of overlap that will need to be rationalized. Probability: High

Google may like the content and some of the tools WebMD would bring, but they are also pretty far along in their own plans/development and Brand, well Google has plenty of that. Probability: Low

Microsoft is much like Google, but has a greater propensity to make an acquisition to keep Google at bay. Microsoft might acquire WebMD as a defensive move. Also, Microsoft might like to have all those enterprise customers, not that they don’t have them already, but it could sure extend their presence in enterprise accounts. Probability: Medium

Intuit has taken a decidedly low profile approach to the PHR market. If they wanted to dramatically boost their visibility and further strengthen their product portfolio, this would be a good move for them. Unfortunately, it takes Intuit outside of its sweet spot/core competencies, thus they are unlikely to make a move. Probability: Low

Yahoo? Why not, though they seem to be ignoring the health & wellness market and have enough issues to deal with right now, primary among them the beast from Redmond. Probability: Low

Large insurers like WellPoint or Cigna could make a move similar to Aetna’s acquisition of ActiveHealth or UntiedHealth’s acquisition of HeathAtoZ and acquire WebMD. Thing is, the scale of a WebMD acquisition is massive in comparison and it could get quite messy as a lot of health plans (over 100) have some form of a relationship with WebMD and may bolt if WebMD goes to a competitor. Probability: Medium-low

Other HIT vendors such as McKesson, GE, Siemens, etc., are focused on business to business sales and in particular sales to hospitals. While WebMD gives them future paths for growth and could be leveraged in innovative ways (connecting clinicals to PHR and decision support tools), falls outside their current sales and distribution channels and is simply not in their DNA. Probability: Low

I’m sure their are other suitors out there, but this is just a quick hit list off the top of my head. And while I can give no definitive answer as to who the suitor will be, WebMD will have new ownership in 12-18 months. Probability: Very High

USA Today Looks at Health .Com Survivors

USA Today had a brief article in today’s edition looking at why some health-centric Web companies survived the dot com bust and are thriving today.

Unlike most USA Today articles, this article was not superficial and the reporter did his homework. My only major quibble is with the companies (well one of them) that were profiled. Article profiles WebMD (logically), BabyCenter (yes, they fit as well) and About.com (how did they ever chose About.com?) as examples of those that have made it. Would have also been nice to see some coverage of PHRs, but maybe they are saving that for another story.

Here are a few of things I liked about the article:

  • Comment by BabyCenter CEO that GenY are much more comfortable sharing information online (they grew up with MySpace and Facebook afterall) than previous generations. This is giving BabyCenter a nice up-tick in traffic and thus advertising revenue. Might this portend that a PHR like VitalChart, which has strong interaction/social tools, will take-off in the future? If this is indeed an important trend, which I believe it is among this next generation, other PHR companies need to get busy.
  • Persistence pays along with a parent with deep pockets and patience. All of these companies have public companies as parents: WebMD has Healtheon, BabyCenter is owned by J&J, and About.com has the NY Times for a parent.
  • Substantiated my previous post that RevolutionHealth, in spite of its massive marketing push is still well behind WebMD, despite its claims stating otherwise.

Good job USA Today and reporter Jon Swartz, you surprised me today.

Odd, Facts Don’t Support Revolution Health’s Claim

Last week, Revolution Health made the claim that they had surpassed WebMD as the number one stop for consumers looking for health information.

Ignoring Google’s massive presence for searching on medical information is one thing, but going so far as to say they have surpassed WebMD is certainly a stretch of the imagination.

Did a quick check on Alexa to see just how these two websites compare and it is quite clear that Revolution Health has a long, long was to go before they even begin to approach the dominance of WebMD.

As the Alexa graph below shows, WebMD maintains a commanding lead over Revolution Health for the past six months with little gain by Revolution Health, if anything, a slight decline in the past month relative to WebMD.

rev-vs.jpg

Which leave the question, what is Revolution Health using to make this claim. Certainly, their press release does not provide any supporting documentation or metrics to support such a bold claim.

By the way, did a quick comparison with Microsoft’s HealthVault. Despite a brief up tick around the announcement date of HealthVault (early October), HealthVault barely even registers on Alexa.

RevolutionHealth’s Projections

Late last week, iHealthBeat, a service of the California Healthcare Foundation (CHCF) posted an interview with RevolutionHealth’s senior medical director, Dr.Val Jones, While the overall interview had predictable questions and responses, I did like the concluding question and answer, which is provided below:

iHealthBeat: What are your predictions for the online health care market in 2008 and beyond?

Jones: With decreasing access and increasing patient loads, I think we’re going to see the consumer-driven health care movement take center stage. Patients are going to need to “do it themselves” a lot of the time (meaning manage their own health information, teach themselves about disease management and make financial plans to take care of their own needs if the government cannot afford to do so).

Another trend I have my eye on is the retainer medicine movement. As primary care physicians continue to be squeezed out of existence by decreasing Medicare reimbursements, they are beginning to join an “off-the-grid” group of providers who simply do not accept insurance.

As more PCPs create retainer practices, I think IT solutions will really take off. Online tools that simplify their practices and speed up their patient communication will be welcomed and encouraged.

On her first point regarding consumers having to take more control, I fully agree with her but I am challenged to understand exactly how that will happen. Today, the vast majority of consumers, despite all the medical-specific Internet search they are doing, are little prepared to take on this role. It is increasingly being dropped in the consumers lap, most often by employers looking to reign in healthcare costs, with little attention paid as to how a consumer will actually do this. I see lots of talk about consumer empowerment, but we really need some pro-active consumer education first. Sites like RevolutionHealth, WebMD, and even the relaunched initiative by AHIMA on PHRs can help, but even these efforts are based on the assumption that everyone is using the Web. As a society we need to step back and begin rethinking how we educate consumer on their role in managing their healthcare. Ideally, such education would begin in high school for the next generation. And for those adults today, a more aggressive and comprehensive combination of employer and provider drivn educational efforts is needed.

Her second point about physicians going off the grid is also quite interesting and something I myself have not paid much attention to. This will, however, be important to track closely as it could become another important driver for accelerating the growth in adoption and use of Personal Health Records (PHRs). While PHR vendors are telling me that they are inundated with RFPs from employers and health plans, the true long-term success of these PHR systems will be consumer (employee) adoption and use.  As physicians “go off the grid” and consumers choose such physicians for any number of reasons including possibly costs (a key issue for those with high-deductible plans?), PHR solutions that are truly portable and allow the consumer to securely share their records with the physician(s) of their choosing will have an advantage over those that do not.

Moving the Ball Forward: PCHRI 2007

The Children’s Hospital Informatics Program (CHIP), developers of Indivo, hosted PCHRI 2007, an invitation only conference over the last two days. The event brought together about 100 leading players in the Personal Health Record (PHR) market to discuss where the market is today, what challenges lie ahead, and what we might see in the future.

Over the past year the PHR market has certainly seen a significant pick-up in activity. Microsoft rolled out HealthVault, the big employer-led Dossia initiative adopted the Indivo platform, Kaiser-Permanente released their PHR to its 8.5 million members, Aetna released a hosted PHR and let us not forget Google, who has yet to release anything but continues to generate a lot of buzz in the market. Given this backdrop, the PCHRI conference was full of updates, announcements, outlines of strategies (Dossia in particular which I’ll do a separate post on), and discussions on what is needed to move the PHR ball further forward in 2008. Following are some highlights.

Personal Health System
Discussion is moving beyond just what a PHR is to what a Personal Health System (PHS) may look like. This is being driven in large part by the actions of Microsoft and Dossia who are both looking to provide a personal health platform (PHP) upon which a wide variety of applications may sit, including PHRs. As a corollary to this, Aetna said it will allow users of its PHR to move their records/data into HealthVault or Dossia and New York Presbyterian and CapMed are currently working with Microsoft to insure interoperability between their PHRs and HealthVault.

Role of Standards
Standards are not perceived as a problem for PHRs. There are plenty out there in the market today, the PHR community simply needs to agree on one and move forward. Ah, but therein lies the trick – getting them all to agree. This point will become irrelevant as the PHP players define the standards for their platforms. And for those platforms, Open Source is not important, but Open Standards and Open APIs (application programming interfaces) are critical.

Regulations & Policies
Virtually unanimous agreement that this market is too immature for any strict, prescriptive policies or regulations. Rather, participants saw a need for a light policy framework to provide the market with the flexibility needed to try new approaches and value propositions to meet consumer needs while still providing some government oversight.

Elephants
A couple of elephants remain in the room, one quite visible, the second less so. The visible elephant is privacy as this remains the number one issue for consumers. What Aetna found, however, in their focus groups is that once consumers started using the PHR, their privacy concerns diminished. Another interesting revelation is that consumers are quite willing to relinquish privacy concerns, via voluntary disclosure, if they thought that it would contribute to a greater common good. This finding came from the folks at PatientsLikeMe who stated that among their members, over 70% have volunteered information about themselves on the site that is index-able and searchable by Google. (Today’s WSJ Health Blog also released some interesting survey findings on this issue.)

Despite these positive privacy trends it was clear that the PHR industry as a whole has not done a thing to allay consumer privacy concerns and current privacy policies remain confusing, fragmented and all too often misleading. As with the comment above on standards, hopefully the future platform/system plays in the personal health market will drive a higher level of privacy policy standardization and compliance.

The invisible elephant is the lack of digital data and when it is available, delivering it to consumers in a format and context that they can readily understand and take action upon. Widespread agreement that a model that relies on the consumer to manually populate a PHR with data will not see broad adoption (ironically, this is what is most commonly found today among untethered PHRs). Therefore, automating this process is critical. SharedHealth, the Tennessee Health Information Exchange (HIE) did a demonstration project for CMS earlier this year moving large EMR data sets to a PHR. The biggest challenge (manually intensive and expensive) was converting EMR data into terms the consumer will understand within their PHR. This elephant will be in the room for quite some time as there were no easy answers presented at this conference as to how to address this issue.

Data Usage
There are quite a few stakeholders circling the PHR market hoping to get access to this potentially rich treasure trove of data. The pharmaceutical industry is looking to access this data to perform a wide variety of research tasks from identifying potential candidates for clinical trials to finding genetic markers for diseases in new drug development. Amgen stated that they have been attempting to use de-identified EMR data for oncology research but are finding it arduous and expensive. Amgen reflected on a breast cancer research program where they found that the critical data fields of interest in the EMR data sets were filled out only 20% of the time and that does not account for “dirty” data. Ultimately this was a worthless endeavor for them. Amgen sees strong potential in the PHR market for providing such data and openly stated it is willing to invest to make it happen.

And it is not only the private sector looking to get its hands on PHR data – Uncle Sam wants it as well. The Center for Disease Control (CDC) for example is interested in gaining access to provide them with a better picture of population health and bio-surveillance.

As this event was focused on Personally Controlled Health Record, there was general agreement that such data sharing was acceptable provided that the PHR solution offered sufficient granularity to allow the consumer to selectively share data (most PHRs today do not) and that it was up to the consumer to decide whether or not to share such data, not the PHR provider.

Going in the opposite direction was PatientsLikeMe. They stated that they have every intention of sharing their customers’ data with pharmaceutical companies – as it is core to their revenue/business model. They believe that pharmaceutical companies are in the best position to help those on PatientsLikeMe with new drug therapies and thus should be welcomed, not spurned. Of course, many at the event who come from the physician side of the fence looked at this idea with a jaundiced eye.

Some Final Data Points

  • Aetna’s PHR, which was released on Feb 14, 2007 now has over 800,000 users. Strongest adoption is among chronic care patients.
  • The Veteran’s Administration’s PHR now has over 500,000 users.
  • CapMed has over 600,000 of its PHR in the market today.
  • WebMD is supporting over 200 private PHR portals for payers and employers.
  • Dossia is on track with roll-out to early adopters by end of 2007.
  • Of the 39 BC/BS plans nationwide, 67% have gone live with a PHR or will do so in the near future.

There is always an afterglow coming from one of these conferences and this one is no different. Beyond the glow though, it is hard to argue that PHRs are still a technology not yet ready for prime time. This is clearly changing and quite rapidly. No longer does this market resemble Sisyphus slowly rolling a ball up a hill. This ball is starting to roll down and is picking up momentum. That’s not to say it won’t hit some speed bumps along the way, but if 2007 is any harbinger, 2008 will be an even more dynamic year for the PHR market.