An Introduction to Online Healthcare
Part 1

By Jeff Fischer (TMF Jeff)

Life is not merely living but living in health.
--Martial, Epigrams

Achoo! These darn allergies. I'm going online for a remedy.
--Internet user, 1999

(September 30, 1999) -- 1998 is remembered as the year that online commerce went mainstream, with Amazon, eBay, and Priceline leading the charge. 1999 may be remembered as the year that healthcare companies rushed online.

Despite their youth, the largest online health-related sites already generate Web-leading traffic. Of the estimated 110 million Internet users, 70 million have visited online health sites. Over 16,000 health-related sites reside on the Internet, but large communities are already forming at the leading companies. Since a strong community is needed to achieve a successful online business, the race is on to grab users in the healthcare space and stitch them into the fabric of a company's website.

This race is leading to several initial public offerings. Almost all of the prominent publicly traded online health sites have gone public in the past nine months alone, including Jim Clark's Healtheon (Nasdaq: HLTH), DrKoop.com (Nasdaq: KOOP), OnHealth Network (Nasdaq: ONHN), and Drugstore.com (Nasdaq: DSCM).

Why the rush?

The trillion-dollar healthcare industry is ripe for much greater and more efficient automation, Motley Fool-like demystification, and a consumer-based business model. The Internet makes all three possible.

First, the healthcare industry's dream of having immediate, worldwide access to all health and patient-related information can become a reality via the Internet. An estimated $200 billion is flushed down the drain annually in the $1 trillion-plus healthcare industry due to inefficient operations. For example, an estimated 20% of prescriptions and test results are lost at some point and must be completed again with great expense. The Internet can organize and streamline healthcare operations nationally and internationally, from billing and diagnosing, to scheduling and recordkeeping. Doing so would mean software standards across the healthcare industry. This will take time, but it will happen.

Second, demystification of healthcare will arrive in tandem with the Internet's community-based information sharing. Of all things, health should not be a taboo or difficult topic. However, it is. Like money, talking about one's health is not the socially accepted norm. At least, it hasn't been. Until now.

Finally, a world of information is at patients' fingertips. In the past, the least likely person to be able to find information on his or her own ailment was the actual patient. When you are sick, it is often too tiring to trek to the library and page through monster-size tomes about disease. The phone isn't a viable solution when trying to find reams of data, either. Enter the Internet. Not only can patients find copious information online, but they can communicate with doctors and other patients without fear of infection, embarrassment, or awkward face-to-face moments. Healthcare is being demystified online much like investing is. Sickness used to be an embarrassing or even shameful, isolating situation. By contrast, the Internet builds communities around illnesses.

With demystification of healthcare comes a consumer-oriented business -- finally! Thank goodness! Studies show that the average doctor-patient office visit has shrunk to a mere eight minutes. This is scarcely enough time for a cordial greeting, let alone to discuss symptoms, a diagnosis, and decide on a course of action in a comforting manner. It is no wonder that many of us dread going to the doctor. Once there, we're forced to discuss one of the most important topics under the sun (our own health) in a rushed, nerve-wracking fashion. This is like trying to restore a masterpiece painting with one stroke of a brush.

Imagine waiting in a reception area for 30 minutes beyond your scheduled time (you probably don't need to imagine this) before being led into a small white room. Inside the room you wait, alone, on a cold table. Finally, the door swings up and a doctor in white whisks in like a ghost.

"Good morning."

"Good morning, doc, how are you?"

"I'm well. What ails you?"

"Well, doc, my stomach has been aching and it has resulted in sweating sometimes and my back then begins to...."

"Okay. Uh uh. Hang on a second. [The doctor swings open the door and talks quietly to a passing nurse about another patient. They share a joke. He laughs. Then he closes the door and turns back to you.] Okay. Continue?"

"Well, then my back begins to ache and when I cough it really hurts and..."

"Does your throat hurt?"

"Umm. Well, it can sometimes, but..."

"Okay. Tell you what. I'm going to write a prescription for X3FuselageQWERTYzOO. If that drug doesn't begin to help you in a few days, give a holler. It sounds like you have some kind of bug that's been going around."

"Well... um... well..."

"Thank you, Mr. Fool. I've got another appointment now."

And he whisks out like a ghost.

Patients facing serious diseases are often given as little time, or treated with as little respect as Mr. Fool in our example. Given the world's patient-to-doctor ratio, of course a doctor's time is scarce. Now that doesn't matter as much.

The Internet provides detailed information about symptoms, possible diagnoses, and remedies. It also provides chat rooms for dozens or even hundreds of people to discuss similar diseases with a few doctors at once. It also provides message boards. What was once all but impossible in healthcare -- namely, a feeling of community and comfort when being treated -- has come to life on the Internet. Widespread information and communities are demystifying what was often frightening. This is turning healthcare into a consumer-driven experience. For most online healthcare sites to succeed, they must cater to consumers. Early leaders have emerged in each of the three online healthcare segments.

On to Part Two -- Industry Segments & Current Leaders