The Web Returns to Health

It will still be a while yet before finding a heart surgeon is as easy as booking an airline ticket on Orbitz or Travelocity.

"I don't see we're at an inflection point because there is still major limitation on quality information available . . . [and] still limitations on cost information. Those limitations on data are not about to disappear," said Paul Ginsberg, president of Health System Change, a non-partisan research organization in Washington.

But with out-of-pocket medical expenses rising faster than family income, and a small but rapidly growing number of the insured turning to health-savings accounts and high-deductible health plans, consumers have begun shopping around, if not for the best hospital for coronary bypass graft surgery, then at the very least for prescription drugs.

Just as important as changing consumer habits, advertisers are also spending more money on Web ads.

WebMD spun off last year in a successful initial public offering and has seen its ad revenue grow. Last week, it reported a narrower second-quarter loss of $1.16 million, down from $1.5 million a year earlier. Advertising contributed to a 38 percent revenue increase.

As a result, big-name investors are once again bankrolling health information Web sites.

Time Warner has sunk money into Waterfront Media, a four-year-old Brooklyn publisher of self-help information founded by Ben Wolin and Michael Keriakos, two former executives with spirituality and faith Web site Beliefnet.

Unlike three years ago, when money for Internet start-ups was harder to come by, the company this past year raised $6 million from several sources, including Time Warner, to build EverydayHealth.com. The site, set to launch later this year, will deliver personalized health information, even by phone or personal digital assistant, to more than 11 million people who have created profiles on one of Waterfront's existing health-related sites.

The Carlyle Group, Allen & Co., and Sequoia Capital last year invested in HealthCentral Network, formerly ChoiceMedia Inc., which bought a collection of sites created during the dot-com boom and revamped them into a network of 25 condition-specific destinations that offer physician-reviewed information and the ability to connect with ordinary people who have experienced the same illness.

Both HealthCentral Network and Waterfront rely on advertising, and could benefit from a shift among pharmaceutical companies away from television and toward the Web, where they have unlimited time and space to relay such information as side effects.

Revolution Health, probably the most ambitious of WebMD's would-be competitors, is backed by Case and board members/investors such as Carly Fiorina, former chief executive of Hewlett-Packard Co., Franklin D. Raines, former chairman and chief executive of Fannie Mae, and Stephen Wiggins, founder of Oxford Health Plans.

Its Web portal, Revolutionhealth.com, is slated to launch in the fall. Revolution Health plans to offer, in addition to the usual searchable encyclopedia of disease information, tools for finding doctors, making appointments and managing health-related expenses.

What sets Revolution Health apart is its offline investments in walk-in retail clinics at places such as Walgreens and Wal-Mart for minor medical issues, and in insurance providers that offer high-deductible plans directly to consumers.

"It's best to attack this problem through multiple prisms and build a set of services that can attract an audience and can aggregate benefits to those consumers as well as those who want to provide services to those audiences," Case said.

RevolutionHealth.com plans to make money by selling customized services to employers and health plans, selling advertising and charging membership fees for a suite of premium services, which may include access to better-quality doctors.

"We don't want to be the place you go to when you're not feeling well. We want it to feel more like your buddy list and your portfolio, a service that engages you because it's personalized, several times a day, not several times a year," Case said.

There were rumors earlier this year that Google was also looking into the delving into the online health information business, a development that does not surprise any of the current players.

"I think you'll see several other companies coming into this space because it is such a huge marketplace and so underpenetrated at this point," Martin J. Wygod, chairman of WebMD, told analysts during a May conference call.