The Silicon Bedpan

Merrill Lynch makes a move after its recent eating crow announcement, sending health care executives to take heed: Online trading will finally be offered.

John Steffens, Vice Chairman of Merrill Lynch, publicly admonished online trading last summer. Imagine his embarrassment as his behemoth company starts offering a web-based trading service to compete with Charles Schwab, as well as other competitors that hardly existed when Steffens made his comments.

It’s the classic case of the sleeping giant finally waking up. Next up: health care.

While the announcement of the Healtheon/WebMD merger jostled other online health-related companies to evaluate their business strategies and partnerships, the overall health care industry (particularly health care providers such as hospitals and health systems) is still in deep slumber to this whole Internet thing.

Innoculated Against the Web?

Health care executives and doctors will tell you that health care is different: People still depend on them to make health care decisions, a person’s health isn’t a commodity, the system is too complex to webify, and people are too worried about security risks.

Take out health references, put in finance ones, and you have the former Merrill Lynch party line. Online trading is arguably complex. People used to depend on their brokers to make investment decisions for them. People used to be worried about security.

There are an estimated 20,000 health related web sites. On one end, you have myriad consumer health information sites including and Johns Hopkins’ Intelihealth. At the other end, you have companies like Healtheon/WebMD and Physicians’ Online, which are focusing their business strategy on physicians and medical groups, offering services to help them manage their clinics or practices.

While companies such as Healtheon/WebMD are helping doctors streamline the Byzantine insurance maze and making it easier for them to process claims and lab tests, the patient is largely ignored. So far.

“If you’re suffering from cardiac arrest, please press 7.”

Ultimately, it will have to trickle down to the end user. The patient.

Over the past several years, as managed care has dug its heels into the marketplace, patients have been pushed to the bottom of the health care food chain. They’re not even patients anymore, but rather capitated lives in the health care marketing vernacular.

So far, Internet health companies have been focusing their attention on whom they consider to be the end users: physicians. But physicians are part of hospitals, health systems, and medical groups. And they’re notoriously cheap and technophobic.

To be successful, Internet health companies need to woo the hospitals, health systems, and medical groups — many of whom are in dire financial crises. CEOs of these mostly non-profit organizations are trying to figure out how to run more efficient businesses so they can keep their doors open.

While the health systems are providers, they are also customers. A successful Internet health company will figure out how to make the providers (their customers) better, more efficient. In the end, the ultimate customer is still the patient.

Everyone Is a Customer

But first, let’s review the difference between a health care consumer and a patient. A health care consumer is generally well. This is a person who usually has a primary care physician and who seeks wellness information to learn how to stay healthy. A patient, on the other hand, is sick and needs to see a doctor or health professional and needs very specific disease information.

This latter group is still lost amid the countless self-promoting health sites. This group is not made up of web surfers who like to get emails about all manner of health related topics just for yuks. They want to know what’s going on with the latest insulin patch for diabetes or whether the gamma knife is a realistic treatment option for their father’s brain cancer.

Let’s face it — health care on the Internet won’t mean much until it focuses its energy where the rubber hits the road: How to improve the communication and relationship between a patient and his physician.

The online health movement needs to figure out how patients will be served. How will outcomes improve? It makes business sense when a patient does well during and after treatment.

Online finance was only mildly interesting in the public consciousness until individual investors could take control and start trading online themselves. Then it became a revolution.

The airlines were doing “interesting” work by allowing travel agents access to their scheduling and ticket buying databases. Not until the end was the customer able to do those same tasks on the Internet did that business really pick up.

Likewise with health care. It’s all pie in the sky until the patient can make a doctor’s appointment on the web, obtain her own lab results, log on for at-home care instructions after same day surgery, or send a confidential question via the Internet 24 hours a day to her own health care provider.

In a highly valued Internet health company, the real measure will be which company will have the most impact on patients. For that, these IPO and pre-IPO companies need to talk to the lowly non-profit (in most cases) health care providers — you know, the ones who actually treat the patient; the reason we’re all here in the first place?

Meanwhile, CEOs of hospitals, health systems and medical groups need to decide now if they are going to be the Charles Schwab or the Merrill Lynch of health care providers.

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