Correction to This Article
An Aug. 8 Business article about entrepreneurs investing in health information Web sites misspelled the name of a source and incorrectly identified his organization. The source is Paul Ginsburg, and he is president of the Center for the Study of Health System Change. Also, the article incorrectly said that 95 million Americans have searched for health information online in the past year. The survey cited did not specify the period of time over which searches were conducted.

The Web Returns to Health

Revolution Health's Tim O'Shaughnessy, left, Sara Rock, Jim Lane and John Malhinha working last week to get the company Web site up and running.
Revolution Health's Tim O'Shaughnessy, left, Sara Rock, Jim Lane and John Malhinha working last week to get the company Web site up and running. (Robert A. Reeder - Robert A. Reeder - The Washington Post)
By Annys Shin
Washington Post Staff Writer
Tuesday, August 8, 2006

Ninety-five million Americans -- about 80 percent of online adults -- have searched the Web for health information in the past year, and the overwhelming majority have been disappointed.

More than 70 percent of those searchers either did not find what they were looking for or had a hard time knowing what to believe, according to market research studies by Jupiter Research and Yankelovich Inc.

That frustration has attracted some famous deep pockets, including America Online co-founder Steve Case, his former employer Time Warner Inc., the Carlyle Group and Allen & Co. Together, they have put more than $100 million into building virtual destinations that offer consumers something beyond disease encyclopedias.

Some want to make it as easy to choose a doctor as a restaurant. Others eventually hope to offer "virtual assisted living" by monitoring medicines or pacemakers remotely, so the elderly can stay in their homes longer.

"The health category is the last frontier where the Internet has not yet transformed that industry, the way it has done for travel, finance, and commerce," Wayne T. Gattinella, chief executive of WebMD Health Corp., said.

Harnessing the Web to make health care more user-friendly has been a holy grail for entrepreneurs since the earliest days of the dot-com boom. But like many online content businesses, they failed because they could not figure out how to make money.

"The mistake that's been made by a lot of entrepreneurs who have pushed those approaches was an 'if we build it they will come' philosophy," said Jay Savan, a benefits consultant in the St. Louis office of Towers Perrin.

Some sites, such as Drkoop.com relied too heavily on advertising revenue. Named for the former U.S. surgeon general C. Everett Koop, it was worth more than $1 billion at one point, but went out of business in 2001 not long after going public. Its assets -- mainly Internet domain names -- were later sold for $186,000 in bankruptcy court. It is now owned by the HealthCentral Network, an Arlington-based company that is part of the second wave of health information Web businesses.

The dominant player in the field, 10-year-old WebMD, survived by merging with Healtheon, founded in 1996 by Netscape co-founder Jim Clark. He saw the Internet as the best way to bring doctors and patients together and "get all the other [jerks] out of the way." The combined company, which also delved into insurance claims processing, physician practice management software and plastics, did not post a profit until 2003.

The nearly $2 trillion health-care industry remains as fragmented and frustrating as ever. But the market for online health information and services has changed enough to make it a viable business, investors, entrepreneurs and analysts said.

A May 2005 Pew Internet & American Life Project study -- which reported that about 95 million people have searched the Web for health information -- found more people were turning to the Web for information about diet, exercise and over-the-counter drugs. They also do more "health homework" online, such as comparing physicians and hospitals.

"The consumer is starting to expect the same information with respect to a health provider as they expect with an airline or investment vehicle," Gattinella said. "Those are the big forces that will accelerate changes in our industry in the next five years."


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