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1996, 1999 and 2002: Three
personal snapshots of e-health
by Matthew Holt
Erstwhile dot-com
executive
August 14, 2002
 Sometimes it’s worthwhile to take a pause and assess
what happened. For those of you upset that your Yahoo stock
isn’t going up $20 a day anymore and that you forgot to short
WorldCom, there is an outpouring of books and articles about
the dot-com era—gone these long 18 months. But I’d like to
take a slightly longer-term perspective about e-health.
It’s an industry that I’ve been around for a while. Like many
of you in health care, I experienced a great deal of
professional change over the last six years. I picked these
three years as snapshots because I was in a different place in
each one, and I could argue that each was close to the center
of e-health and seemed like a rational place to be at the
time. And I’m not altogether sure what happened.
Why
should I know what happened? Well, one of my more modest
claims to fame is that in 1996, at the Institute for the
Future, my team and I authored a report called “TeleHealth.”
Telehealth was the convergence of three major trends: (a)
“traditional” telemedicine such as evaluation, telemetry and
intervention conducted by medical professionals over video
links; (b) the use of the Internet by patients, physicians,
plans and other health care organizations; and, as a subset of
those two, (c) the increased use of remote patient advice,
compliance and demand management services. So I, with a lot of
help from my friends, was at least alert to the trends that by
mid-1998 culminated in something called e-health, even if the
industry that quickly grew up wouldn’t use my term or
definitions.
Before
The Bubble Burst
In 1999, I was a pollster at
Louis Harris & Associates, the venerable New York survey
firm that was busy “becoming an Internet company,”1
changing its name to Harris Interactive, and IPOing at the end
of the year. My colleagues and I surveyed patients using the
Internet for health care and physicians using computing of all
types, including the Internet.
By 2002, I had gone
through the wringer of being in a start-up. In early 2000, I
became one of those ubiquitous “Business Development” guys,
whose role changed from week to week, at an e-health company
that kept adding and subtracting the “.com” from its name. We
had nifty software that actually worked and generated revenue,
some fiendishly clever product people with amazing ideas about
consumer health data, and the experience of being thrown out
empty-handed by some of America’s biggest corporations and
most prestigious venture capitalists.
During this time,
I went to all of the e-health conferences. Some of them were
well-attended, some not—including the one in San Francisco
that went bust and stiffed me on my speaking fee. Some that
were well-attended and looked successful weren’t all that they
were cracked up to be. At the wrap party for one March 2000
conference in New York that we’d talked our way into for free,
my CEO and I purloined a not-for-distribution attendee list.
The list included who paid what and showed that our powers of
persuasion were anything but special—90% of the crowd had been
admitted for free! That was the same party at which I met the
personal assistant to a member of the British comedy troupe
Monty Python. She was starting her own e-health company.
Something should have told me that, in stock market terms, I’d
found the “top.”
When
Content Was King
So what did we see in 1996 and
what did we expect for the future of telehealth? Okay,
okay—e-health. Some of our conclusions were right but obvious.
We looked carefully at the economics behind traditional
telemedicine, such as videoconsults, e-mail consults and other
physician-patient remote contacts, and we concluded that,
without significant government subsidies or payments, it would
remain a minor phenomenon. Even with Medicare reimbursing some
limited telemedicine services, that remains the case six years
later.
We were right to pick up on what was, at the
time, a minor phenomenon, the use of the Internet by patients.
The soon-to-be-named “cyberchondriac”2 was then
using government and public information Web sites and meeting
other patients in online communities, mostly on e-mail
list-serves. We forecasted that this use of the Internet for
health information would grow substantially, riding on the
back of overall Internet adoption, which we said would be at
55% to 60% by 2002. Since then, the numbers tracked by Harris
and others show that we were bang on, with more than 100
million American adults now going online to look for health
information.
We were unsure about who would provide
that information, however, and that hides a big story. This
was two years pre-DrKoop and pre-WedMD. We said that while
AmericaOnline had a chance to cross-subsidize from its ISP
business, everyone else wanting to provide health content and
get paid for it was competing with free information from
government and public interest groups and thus would have a
tough time building a business. To quote the report, “AOL has
a proven formula for reimbursing third party contributors to
its services; so far most Internet content providers are
generating red ink in hopes of uncovering a good profit
formula in the future.”
What we missed was the
incredible stock market mania of 1998-2000, which allowed
companies to sustain huge losses providing health content
online…for a time. Although WebMD is still providing its
money-losing Web sites, all its competitors have gone, and
most cyberchondriacs are getting to health information from
search engines.
In 1999, the Harris “10,000 patients
study” showed that you could find substantial numbers of
chronically ill patients online3 and that they were
using commercial and government Web sites, but not those of
their health plans, hospitals or doctors. The “Computing in
the Physician’s Practice” study showed that doctors were also
using the Internet but not really integrating it into their
workflow, and that the use of electronic medical records was a
long time off.
Internet use was huge, but by late
1999, figuring out which of the myriad offerings at the
eHealthWorld conference had a chance of making it was a
lottery. From the Harris study, I surmised that there was big
latent demand from patients for better online services. This
appeared particularly true for those with constant chronic
illnesses like diabetes, who wanted software tools that
recorded their conditions, delivered relevant information back
to them and communicated that to their doctors. But doctors
weren’t going to be providing those tools, and looking around
the health care industry, it appeared that only health plans
or drug companies had any money to pay for them.
Sales Cycle Hinders Growth
When
I joined the e-health company in 2000, it looked like our
product fit that niche. We had a Web-based health record for
consumers, but we weren’t setting up as a destination portal
like a WebMD. Our software allowed health care organizations
to give their patients/members their own personalized portal
with all their information, plus relevant articles and
information about their conditions. It also allowed the plan
or provider to communicate with their patients and send them
relevant information.
The product was the health
equivalent of an online financial center integrated with
online banking, which by then all banks were forced to
provide. With the threat from online start-up health plans
like Healthmarket and the growth of cyberchondriacs on the
Internet, we had good reason to believe that health plans
would feel the pressure to provide their members with a better
Web experience, and we’d provide an easy solution to get them
there.4
Perhaps our biggest mistake was that
we sold the product, based on a somewhat immature demo, to a
major health plan within three months. (One bankrupt e-health
dot-com spent $4 million building a similar product and not
only never sold one, but never actually talked to a
potential customer!) We built out the product, felt that it
was pretty nifty and took it to every health plan in the
nation and anyone else we could think of. In the end, almost
every major health plan announced that it would provide some
type of improved online Web service, including some type of
consumer health record. But in health care, as in software,
the announcement and the action are often only distantly
related.
The two-year-plus sales cycle was too long to
sustain the e-health efforts of this company, or the 30-odd
other companies selling consumer health records. We were
luckier than most, as we actually sold two expensive software
licenses to two large, publicly-traded companies as real
customers, but the reality of the market was brought home to
me in an e-mail from a potential client at one of the very
largest health plans in America. His exasperated e-mail told
us that all current and future resources for the next two
years were going to sort out the current mess in their IT
department and that, even if any other technology initiative
would save them time and money doing that, they still couldn’t
consider it for two years.
E-Health
Adoption Still On Horizon
By mid-2002, not one
major health plan has a Web site that allows its members to
see what conditions they have or what medications they are on,
look at a record of their office visits, or receive
personalized information based on that information. All of
this data is buried in the bowels of health plans, but none of
them seem to think it’s important to share it with their
members. This will happen. It’s too easy to do, and eventually
it will become standard practice, just like online banking.
So what did I learn from six years in the maelstrom of
e-health? As we said in 1996, although there has been huge
change, notably in patient access to information, most
e-health activity remains on the fringes of the “health care
system.” It will stay there until the government mandates,
implements and pays for it. In other words, this is a
generational change, and e-health’s adoption as part of the
core health care delivery process will take a long time. Even
the “easy” parts, such as improving online customer service,
are on a three- to seven-year time cycle.
Did I learn
anything else? Perhaps. If you want to make lots of money, you
have to time the stock market, which has nothing to do with
reality. If you want to change the health care world, you have
to be patient!
Notes
1Our CEO,
Gordon Black, had cunningly noticed that survey companies had
stock prices that reflected their usual low margins, whereas
Internet companies had stock prices that improved dramatically
the worse those margins were! After its IPO, Harris was
briefly worth about 15 times its “traditional”
valuation.
2This great term was first used by
Humphrey Taylor of Louis Harris, although I believe he stole
it from his son-in-law.
3By the time I left
Harris in 2000, they had completed interviews with more than
600,000 chronically ill adults—interviewing on a scale
unimaginable a few years earlier.
4We also had
grand plans to use the data we gathered, integrate it with
other data and sell aggregate data about consumers to drug
companies, which were on the way to spending $2 billion on
direct-to-consumer advertising based on almost no real
targeting data. In one version of our business model, the
health plan got the software for free in return for all their
members’ data, but that arrangement never flew. In the end,
the tools to help pharmaceuticals target direct-to-consumer
advertising seem to have found a market need, but as a
standalone business with virtually no connection to the
e-health application.
About
the author
Matthew Holt is a health care
forecaster, commentator on the health care system and, lately,
e-health executive. For the last few years, he's been studying
the use of the Internet by patients and physicians. He can be
reached at matthew@matthewholt.com, and his Web site is http://www.matthewholt.com/.
The views
expressed in this Opinion column are those of the author and
do not represent the views of the California HealthCare
Foundation or the Advisory Board Company.
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