(UPDATED with additional information on the fundraising, venture interest in the online healthcare-info sector, and a note of caution about these new ventures.)
You can’t swing a dead cat among venture businesses these days without hitting a new online site devoted to healthcare information of one sort or another. Over the last few months, we’ve seen a parade of major announcements — many of them big on vision but vague on particulars — from the likes of Steve Case’s Revolution Health, MedBillManager, TauMed, DailyStrength, and other sites that offer some mix of searchable health information, social networking, doctor comparisons, medical-bill management or digitized health records designed for people who want to make sure that doctors of their choice have access to their medical information. (See previous coverage of the space by Matt Marshall and Dan Kaplan here, here and here.)
The latest entrant is HealthCare.com, which just announced $6.1 million in a seed funding. The company’s site is currently an “alpha” version, according to HealthCare.com Chairman Robert Monster, but it gives you a sense of what the company plans to offer. The site’s core lies in its searchable disease and drug database, which Monster says will aggregate the “best information” on health available across some 70,000 other Web sites. HealthCare.com also plans a “symptom checker” that allows users to zero in on potential diagnoses via clickable Flash animations of the human body, and individual accounts for patients and doctors, which for patients means personalized health information and management of electronic health records, insurance information, and online prescriptions. For doctors, the site plans to provide personalized Web sites, blogging tools, some form of network for doctor-to-doctor story-swapping, and “knowledge boards, forums and surveys.”
Without question, this online-healthcare stampede indicates that venture capitalists are intensely interested in the area. It’s equally clear, at least to me, that this space is already in danger of overcrowding, since it’s difficult to imagine that any of these services can succeed unless they attract a critical mass among their desired audience, whether patients, doctors, large healthcare providers or insurers (and sometimes all four).
More fundamental, however, is the question of whether these services are really addressing pressing needs. The medical social-networking promised by the likes of DailyStrength, for instance, sounds a great deal like the sort of thing patient-support groups have offered on various disease-specific Internet sites for some time. It’s not at all clear to me what patients have to gain by re-creating those communities on a single site, since cross-talk between people with very different health problems is generally pretty rare — cancer patients and people with back problems, for instance, don’t generally have much to say to one another.
There are, of course exceptions, such as various autoimmune conditions and certain related cancers. It’s also possible that advancing knowledge of the molecular basis of disease — that is, for instance, the genetic mutations that drive particular cancers or different forms of heart disease — may eventually break apart today’s disease categories in ways that an integrated community site might be better poised to exploit. All that is still some ways off, however, and in the meantime it looks like the traditional diagnostic categories are going to hold sway.
The idea of helping patients manage electronic health records, by contrast, is very attractive, but it faces a number of hurdles that most of these companies scarcely acknowledge. For instance, the NYT recently noted that fully three-quarters of all doctors aren’t using electronic health records — a number that goes up to 95 percent if you look only at offices with five or fewer doctors. One major reason: Doctors generally don’t have a financial incentive to invest in the necessary technology.
As the NYT reported:
The experience of Dr. Richard Baron, who practices with three other physicians in an office in Philadelphia, provides a glimpse into the predicament. In 2004, Dr. Baron and his colleagues made the transition from ink and paper to computers and electronic health records. They were doing what health care reformers had been advocating for years. But the arithmetic of investing in health-information technology is daunting, especially for small practices like Dr. Baron’s. His office spent $140,000 on personal computers, including tablet PCs, servers, software and installation.
The office’s annual technology costs, he said, were about $50,000, including maintenance and technical support, and he plans to upgrade the three-year-old computers at a cost of $54,000. Those costs do not include the lost productivity in the first year, when the staff was learning to use the new technology.
Dr. Baron’s office has saved money — in transcribing medical reports, for example — and his practice now handles its 6,000 patients with three fewer office employees. He described other benefits, mainly the ability to find information quickly for patients, hospitals, insurers and labs with a few keystrokes.
The technology, Dr. Baron said, has also helped make him become a more adept physician. But it has not yet paid off in dollars and cents: the savings in salaries is less than the costs entailed in computerization. “It is a high-risk venture,” he said, “and you do it at your own financial peril.”
Until those incentives change — and don’t hold your breath on that one — it’s hard to see how online services focused on electronic health records are going to have much impact.
Of course, there’s also the question of how sites like HealthCare.com plan to make money. Monster says the site aims to be the “Google of healthcare” — now, where have we heard that before? — and emphasizes that the company’s founders, Matias de Tezanos and Jose Vargas, are executives with “deep experience in digital media.” (See their bios here; interestingly enough, neither seems to have any background in healthcare.) Monster, who peppers his spiel about the company with Web 2.0 buzzwords, says the site will “add value to the integrated agenda for enabling patient-centered healthcare,” whatever that means, and adds that HealthCare.com will take a “global approach” as opposed to the supposedly U.S.-centric efforts of its competitors. Stay tuned for how all that plays out.
HealthCare.com, which has offices in Miami and Bellevue, Wash., raised $1.2 million from Robert Monster’s new venture firm, Monster Venture Partners. The company’s founders and two “high net-worth individuals” from Latin America joined in the funding, Monster says, with founder contributions accounting for more than half of the $6.1 million. The Seattle Post-Intelligencer’s venture blog has some additional details here.