MediaPublishingThe Internet Opportunity in Healthcare

The Internet Opportunity in Healthcare

No other industry could benefit more from the Internet than healthcare. Despite this, the industry is way behind in applying the Internet effectively. So how, specifically, can the Internet help? John reviews the opportunities and pitfalls.

At a recent weeklong course on e-health held at Harvard University, Ira Magaziner, the former senior advisor to the president of the United States for policy development, noted that he knows of no other industry that could benefit from the Internet more than healthcare. Despite this, the industry is way behind in applying the Internet effectively.

Let’s set the stage for the Internet opportunity in healthcare by highlighting a few facts presented by Magaziner and others at the e-health colloquium. Despite having some of the best technology and care in the world (Where does the sheik of Kalamazoo go when he learns that his prostate is the size of a grapefruit? Hint, it’s not France), the U.S. healthcare system is on life support. The United States spends more of its GNP on healthcare — 14 percent — than any other nation in the world, compared to 9.5 percent or less in other industrialized countries that have better outcomes. Incidentally, France has some of the best outcomes!

And lest we forget, we still have 44 million uninsured in America and another 38 million underinsured and rising, according to Magaziner, despite our current economic expansion. Believe it or not, fully one-third of all children in this country are growing up without health insurance. And healthcare costs, after a brief pause, are now once again rising faster than inflation.

Oh yes, in case you thought all of this will have little effect on you personally, despite recent changes by the federal government to make the Medicare trust fund a bit more solvent, it will still be pushed into insolvency by the baby boomers. God help the folks who come behind the boomers. If something dramatic doesn’t happen, those lucky postboomers will have to pick up the tab so the rest of us boomers can continue to play shuffleboard.

How can this be true in the richest nation on earth at a time when we are generating enormous wealth and our economic expansion is unparalleled? The answers are complex, and an in-depth discussion of them would fill volumes; however, the fact that we spend 30 percent of our healthcare dollars (300 billion dollars per year) on administrative expenses might provide a clue.

The truth is, healthcare providers (MDs, hospitals, nursing homes, homecare providers, etc.) are gagging on a ridiculously unhealthy diet of eligibility requirements, referral management protocols, and claims processing. For an industry that is information- and transaction-based, its slowness in implementing the single greatest advancement in connectivity in history has been, to date, amazingly slow.

Healthcare runs, for the most part, on paper, phone, and fax, or, as one speaker put it, the system runs on VDTM (Vertical Dead Tree Media)!

So how, specifically, can the Internet help? Speaker after speaker (and there were more than 50 of them) had something important to say during the six-day conference on the opportunities (and a few pitfalls, such as privacy and equality issues) of Internet application to healthcare. Essentially, the opportunities fall into four categories:

  1. Content
  2. Commerce
  3. Connectivity
  4. Care

Content has received the most publicity and fanfare with the rise and fall and now blip of The general theme, and a correct one, I believe, is that patients will continue to demand and get more and more information about their healthcare, and they will demand involvement in the decision-making process regarding their healthcare. In addition, the Internet is already important and will continue to grow in importance as a source of information.

Thirty million people are searching the web for health-related information, and most of those are women who, incidentally, make the vast majority of healthcare decisions in our society. In addition to, other key commercial sites in this venue include Medscape and OnHealth/WebMD.

More and more hospital systems are entering this space, including the Mayo Clinic, Sharp Healthcare, and Laurus Healthcare. In general, most of these consumer portals are experiencing major problems due to an inability to monetize the eyeballs. As it has in other industries, the future will bring greater personalization of sites, connectivity with physicians, access to medical records, and greater interactivity. Concerns over quality and objectivity must also be addressed, and the use of the Internet in actually managing care will grow.

Commerce refers to the purchase of medical products on the Internet — both B2B, where most of the action will be, and B2C. By 2004, it is estimated that the B2C market for healthcare e-tailers will be $22 billion, and B2B will be $348 billion! Most of the former will be drug sales.

Currently 1,000 drug e-tailers exist, and they are almost all doing poorly. The B2B space offers the most opportunity to drive down purchase and transaction costs on everything from equipment to tongue depressers. And as it has in other industries, the future will bring much growth, consolidation, and fallout.

Care management will include greater use of digital cameras and the monitoring of chronic disease in the home via the web. (See Numerous products are currently being developed for this market.

Web users are already demanding (and, in many cases, getting) the opportunity to communicate with their doctors online. Some health plans are already offering the opportunity for subscribers to ask specialists questions online with a guaranteed 72-hour turnaround. (See The colloquium featured several speakers from firms specializing in connecting patients with MDs and nurses. (See,, and

Connectivity, or the linking of payers and providers combined with an electronic medical record, will provide huge efficiencies and improved outcomes in healthcare, once implemented. The goal is to combine all inpatient and outpatient clinical results (for example, lab and x-ray results, nurses and doctors notes, and orders) into a seamless electronic medical record that is connected to providers, the patient, payers, selected researchers, and suppliers and purchasers of healthcare.

Obviously, huge confidentiality, data warehousing, and legacy system integration issues exist. The federal government is attempting to address the privacy and connectivity issues through its rollout of the Health Insurance Portability and Accountability Act regulations, but this will take time.

There are currently 30 billion healthcare transactions annually with only one percent performed online. Clearly, the opportunity for savings in this arena is monumental. Healtheon/WebMD is the major player in this area. However, the Care Group System in Boston has also made great strides in connecting physicians and their hospitals, insurers, and patients. (See It has implemented a totally integrated medical record and patient registration process, including referral management, connectivity to a physician’s office, patients, and insurers, and the ability to make appointments online, etc.

Microsoft is working on a tablet computer connected to the Internet that will translate writing into typewritten medical-record information. It will be less than one-half-inch thick and provide the practitioner with automated access to all of a patient’s medical-record information.

Total seamless connectivity will make physicians and nurses more efficient and effective; eliminate lost charts and lost medical information; reduce the need to duplicate tests; reduce the cost of filing, retrieving, and transcribing data; reduce clinical errors from illegible handwriting; reduce miscommunication and incomplete data; and facilitate clinical research. It will automate the process of appointment scheduling, management of referrals, and preauthorizations on medical necessity, documentation, coding, and billing.

In the process, many billions of dollars will be saved that could be used to improve the quality of the current system, provide access to all, and save Medicare from bankruptcy. How’s that for opportunity!

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