THE RISE AND FALL OF e-HEALTH
It Was Coming All Along

April 3, 2000

For years, thousands of people around the world have been publishing small Websites dedicated to a specific health or mental health topic. Maybe it was a site devoted to colon cancer, or breast cancer, or traumatic brain injuries. Maybe it was a site full of information about depression, or mania, or borderline personality disorder. Thousands of people toiled hundreds of thousand of hours to create these small, informative sites, linking to other great informative sites from the federal government (such as the NIH or the NIMH) or patient advocacy organizations (such as the National Mental Health Association).

 Then came money. And money changes everything.

A Very Brief History
In late 1996 and early 1997, companies started forming around the idea of compiling a whole bunch of health or mental health information onto one site, and making money by selling targeted advertising on these mega-sites. It was happening in other industries, such as news, entertainment, and technology, so it made sense to give it a try in the healthcare industry as well. Except that a person's health is probably one of the most important and valuable things we all hold dear. These companies didn't quite get that at the time. But they would.

 Before you knew it, venture capitalists were circling around these companies, seeing a profitable business waiting in the wings (since healthcare in the U.S. is nearly a $1 trillion a year industry). Only one company really understood what it would take to grab a significant portion of that pie (Healtheon), while the others thought it could be done through appealing to consumers to come visit their site over that of all those smaller sites or the NIH or NIMH directly. They talked in Internet jargon about "value-add" and an "electronic medical record" (which was later changed into the more nebulous and softer-sonding "personal medical record"). Everyone thought that people like you and I would think nothing of trusting our valuable medical data to these for-profit, commercial companies to store.

 And so they arose. Drkoop.com and WebMD were actually somewhat late players to the game, but each found a way to wiggle their way into an already-crowded e-health marketplace. Drkoop.com through its brand name recognition (although I still get the "Who's that?" when I'm talking to people) and WebMD through a cash-infused acquisitions budget, allowing them to gobble up other key players (such as the popular Sapient Health Network). This was in 1998, and already some people could see the writing on the wall for some of these companies if they didn't have a more sound business strategy than simply pursuing consumers with congegrated health information.

No Plan But Lots of Money
Of course they all had plans, business plans, but the problem with these plans is that they were all geared toward what the investors wanted to read and hear. They hired others to help them develop a coherent strategy, but didn't listen closely to everything those consultants had to tell them. Most of these companies had little or no healthcare experience. Drkoop.com morphed from an electronic medical record software company into a consumer healthcare portal. That's a heck of a transition to undertake, and a difficult one to pull off successfully. Yet they managed to do just that.

 With only a limited understanding of the marketplace and how to make money in it, they grabbed content from anywhere that was selling it or giving it away for free. The NIH and NIMH were two popular places to find free content and reposition it on their sites. WebMD bought an entire company that specializes in medical and health information just to get unfettered and exclusive access to its content library. WebMD finally realized that in order to survive as a company, they needed a more comprehensive strategy than just repositioning health information and selling advertising. So they found a partner and a match in Healtheon, who acquired WebMD in 1999.

 The companies also struck partnerships with other content providers to flesh out components of their Website. Drkoop.com created a clinical trials area after partnering with a clinical trials company. Of course, this presents new types of problems when that area offers only trials from that one company's database. That means consumers visiting that area will never see the vast majority of clinical trials they could sign up for. Luckily for consumers, the NIH offers an open, comprehensive clinical trials database. And, oops!, drkoop.com forgot to let consumers know that they were getting paid for each successful clinical trial referral. (In fairness, drkoop.com stopped this practice shortly after it was brought to light in a negative press article in the NY Times, and now offer a more open, but clearly not very comprehensive, clinical trials database. They still do not help consumers find information that drkoop.com doesn't have by providing a link to the much larger NIH database, though.)

Money Changes Everything
Money does change everything, and when it comes to money which could help a company meet its quarterly analyst expectations for its revenues, it can also have the power to affect editorial decisions.

 I've detailed cases in the past where the financial impact of gaining a certain partner or sponsor somehow impacted the positioning or quality of the editorial content. E-health companies struggle with this, I know, and sometimes they make bad decisions. But they should be, above all people, more sensitive to the impact their decisions have on a person's trust of them. Sharing psychographical information about users who visit an e-health Website with advertisers is probably not the best decision. Yet up until about 4 months ago, nearly every e-health Website was doing just this thing. Of course none of it is personally identifiable, but it still makes people a little wary. And weary.

The Death Bell Knells
The recent plunge in the value of consumer-oriented stocks on the NASDAQ has hit especially hard for these nascent e-health companies. All but Healtheon have been significantly affected, because Healtheon has always had a significant business-to-business vision and strategy. Their main focus is hooking up everyone in the healthcare market electronically so there is less paperwork, less confusion, and less chance for medical error due to something stupid, like a pharmacist misreading a doctor's horrible handwriting of a script.

 Is this the end of these content repurposing companies? Hell no. The field will consolidate around the big players, who will tweak their business models to try and not be so reliant on advertising and sponsorships. Do these companies serve a purpose to consumers that isn't already served by others, such as the NIH or the AMA (or one of the APAs)? Not that I can tell, after even having worked within one of them. Most of their content is not original and comes from other third-party sources. Most of these sources are available online. I have never found something of true value on one of these sites that couldn't be found elsewhere just as easily (and usually with less advertising!). I imagine others will learn that the "value-add" these companies bring to the Web has everything to do with a value-add for advertisers and investors, and very little for consumers.

 The only original, valuable content these e-health companies do have is their communities. The loss of these online communities will be unfortunate, but not unexpected. Many were built with a certain cynicalness and business need to create "stickiness" on their Website. Open, free, and noncommercial communities exist, and have always existed, on the Internet. These are not reliant on any one entity to ensure their continued existence, so in that way, they can be more stable.

 Content repurposing in and of itself is not always evil, bad, or unnecessary. But it was probably never a good idea as the main strategy for an Internet company. Consumers are more savvy than that, and need and want something really innovative to keep them coming back.

 - John

Last reviewed: By John M. Grohol, Psy.D. on 27 Jan 2007
    Published on PsychCentral.com. All rights reserved.

 

 

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