Health is wealth
With physicians, hospitals, HMOs, and laboratories using its services, Healtheon/WebMD is poised to usher in a new era in healthcare. Started in 1996 by Netscape founder Jim Clark and current EVP and chief technology officer Pavan Nigam, Healtheon had been building its network through partnerships with companies like United Healthcare and SmithKline Beecham Clinical Laboratories. The company went public in February 1999, and three months later merged with health information web site WebMD. The resulting company integrates the enitre healthcare industry, allowing patients, physicians, hospitals, insurers, employers, and other healthcare organizations to interact. The Healtheon/WebMD deal raised the profiles of both companies, paving the way for a $1 billion partnership with Rupert Murdoch's News Corp. in December 1999. The deal included a $100 million cash investment, $700 million in branding services over the next ten years, and the transference to Healtheon/WebMD of 50 percent of News Corp.'s Health Network, a health-oriented cable television station.
Hungry, hungry Healtheon
Healtheon didn't stop with WebMD - in February 2000 alone it acquired three companies. Healtheon bought Seattle-based rival OnHealth in a $312 million stock swap, in a deal that nearly doubled its unique users and increased traffic to its consumer web site. In February, Healtheon also acquired competitor CareInsite and CareInsite's parent company Medical Manager Corp. for stock worth about $5.4 billion. The deal merges the two most prominent players in the "e-health" business, and gives the new behemoth great potential in getting doctors to actually use its online services, since Medical Manager had connections to 455,000 physicans through their software-selling operations. In January 2000 the acquisition of Quintiles Transnational Corp.'s ENVOY Corporation was completed, bringing 250,000 physicians, 35,000 pharmacies, 47,000 dentists, 4,500 hospitals, and 900 payors under Healtheon/WebMD's netwrok. The company now plans to process more than 2 billion transactions a year in the United States. Healtheon/WebMD currently makes 60 percent of its revenues from transaction fees, with the rest coming from advertising, royalties, and online sales.
All at the touch of a button
Its Healtheon Practice service is a web-based desktop application combining its various applications with reference services and intranet content aimed at doctors and staff. All of Healtheon's services are intended to streamline processes like patient billing, prescriptions, lab work, referrals, and clinical and administrative information - and to reduce the high costs associated with these operations. The company's MyWebMD site provides consumer services like health news, information on drugs and diseases, and a health care directory, as well as features including live chats and a sports and fitness store.
Diagnosis: good long-term prospects
The $300 million purchase of Kinetra LLC, an online provider of healthcare transaction services, in December 1999 was a strategic acquisition for the company, beefing up its ability to provide administrative transaction services to hospitals, health systems, and insurance companies. In January 2000, Healtheon sold $930 million in stock directly to the Janus fund, bypassing investment bankers (and their pesky fees) and raising cash quickly. These deals, the acquisitions of OnHealth, and CareInsite, and backers like News Corp., Microsoft, Eli Lilli, and DuPont, catapult Healtheon/WebMD into the catbird seat in the crowded e-health field. The competition - from physician portals such as Claimsnet.com, as well as from consumer health information sites like Adam.com and WebDoctor - is giving the company a run for its money, but Healtheon/WebMD's now-gigantic size, access to doctors and patients, and strategic partnerships will likely prove its worth in the long run.
