The Health 2.0 glut, and how one startup adapts

The Health 2.0 movement, as I’ve noted before, makes some big claims about the Internet’s power to transform the relationships between patients and doctors, hospitals, insurers and each other. Some of that is undoubtedly true, and there’s a fascinating amount of innovation going on in this area– helped along by a recent torrent of venture capital.

There’s a downside to the movement, though, and that’s a bizarre oversupply of sites that are all doing slight variations on the same thing. Were you able to pick a Health 2.0 site at random, chances are good you’d hit one of dozens of online physican directories, health-specific search sites or health “portals” with some sort of attached social community. (Or even a site doing some combination of these, such as the health-search-and-community site iMedix, which we reviewed here.)

Probably nowhere is the glut so severe as among sites that aim to help patients find — and sometimes compare — doctors. Consider, for instance, the case of CareSeek, a Solvang, Calif., startup that last year launched a doctor-rating service called, reasonably enough, NursesRateDoctors.com. The idea was straightforward: Let nurses, who are in an unmatched position to observe doctors and their treatment of patients, could dish anonymously about physicians worth seeing — and those to avoid.

But lots of other entrepreneurs had similar ideas for doctor directories and rating services. “When we started, our competitive analysis showed there were maybe six sites doing this,” says CareSeek founder Gale Wilson-Steele. “We recently counted 31. The doctor review and rating space is very big and very noisy. But it creates a problem — no one is going to go to all these sites and rate the same doctor 31 times.”

CareSeek sought its advantage by appealing specifically to nurses, who frequently chafe at the perceived lower status of their profession relative to doctors. The company built its own director of doctors (for some of the general difficulties that presents, see my dCard post) and then went all-out to attract the attention of nurses. “We did everything,” Wilson-Steele says. The company ran banner ads, attended trade shows and handed out gift certificates and chocolate bars bearing the message, “Help raise the bar in healthcare” and the site’s address. CareSeek even set up a laptop in a medical-uniform shop and offered a discount to nurses who agreed to rate a doctor on the spot. (More recently, it also established a partnership with an online nurses-uniform site.)

The idea is a variation on the old strategy of specializing in order to stand up to larger competitors (which in this case includes WebMD, RevolutionHealth, and — soon enough — Google Health). “We just have this specialized information,” Wilson-Steele says. “At some level, hundreds of patient reviews aren’t better than two or three good ones.”

More after the jump:

Of course, course corrections were inevitable. In November, the company renamed the site NursesRecommendDoctors.com, in order to “better reflect its goal of providing consumers with nurses’ recommendations on excellent physicians that provide quality care,” as its release states. Many, though not all, nurses disliked the implication that the site was soliciting negative reviews, and preferred to single out physicians they admire — often their own family doctors and specialists, Wilson-Steele says.

More to the point, as many non-nurses were soon joining the site as nurses, who now appear to make up about half of the user base, although CareSeek doesn’t try to verify whether a user is, in fact, a nurse. Patients have also signed up to raterecommend doctors, and some doctors have also taken the opportunity to weigh in after the site notifies them that they’ve received a review — something it does routinely, usually by phone.

Largely as a result, in fact, the company now plans to deemphasize NursesRecommendDoctors in favor of the CareSeek brand, which Wilson-Steele wants to position as a place where health professionals write about healthcare providers. (The NursesRecommendDoctors site will remain live, although the community itself seems likely to be merged into the broader CareSeek membership.) Over time, CareSeek hopes to establish more of a social community among its members that it can survey. “There’s going to be a lot of very valuable data here about patient satisfaction,” Wilson-Steele says. “You can imagine guiding physicians into some of the highlights and showing them how to run their practice well.”

Despite CareSeek’s efforts, the nurse-focused site remains fairly small, with fewer than 1,000 registered users, and exactly how to turn the ratings/community site into a profitable business isn’t yet clear. Ad revenue is obviously one option, although it seems unlikely that there’s enough advertising to support CareSeek and all its competitors. So is finding some way to draw in partners who might be able to tap the collective wisdom of the site’s community, much the way Sermo does with its gated discussion forum for doctors (see our coverage here).

So far, CareSeek has the resources to experiment with. The company just raised $595,000 from angel investors, which is enough to build out the technology that supports the site and explore business alternatives, and plans on raising another $2 million to $5 million by mid-year. “The first dollars help you focus, the next dollars help you improve,” says Wilson-Steele. “At the end of that, you’ve got a vision for conquering the world.”