You know I have a WSJ subscription. Ok I'll check it.
Here's one for you, I know you, and TomD are going to like it.
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SAN FRANCISCO (Reuters) - "The next Amazon" could be a company that turns America's frustrating health care system into a lean, mean medical machine.
Medicine seems to be an Internet market waiting to happen: Lots of money, monumental inefficiency and a need to connect patients, bill-payers and doctors on one big network.
An intelligent system could potentially shorten the wait that greets every illness in turn-of-the-century America: Lines to see the doctor, lines to get prescriptions at the pharmacy, long waits on telephone lines to fix insurance problems.
Wouldn't it be great if the industry got wired enough to eliminate those endless hours in waiting rooms? Or if it started to wring some of the administrative costs out of a bloated system? Dozens of companies are trying to do that, aiming at an online medicine market that could be worth $11 billion by 2005, according to a new report by brokerage US Bancorp Piper Jaffray.
"We are on the brink of radical health care reform -- not of the traditional congressional nature, but driven instead by new emerging technologies," said Daren Marhula, who wrote the report.
So far, the Web hasn't cured any incredible ills and its biggest successes have involved putting bookstores, travel agents and stockbrokers out of business.
But in all those cases the Internet's transforming power is evident. Merrill Lynch's e-commerce analyst, Henry Blodget, marvels that Amazon.com Inc. <AMZN.O> "went from zero to $1.5 billion in sales in a dead market" in less than four years. In the same time span, online brokers created 7 million new accounts, in a similarly slow-growing business.
Amazon chief Jeff Bezos, in his quest to find his own "next Amazon," by pushing his company into new areas, has gone after pet supplies, music and medicine. Amazon recently acquired 40 percent of Drugstore.com, the online pharmacy that plans an initial public offering soon.
What's the similarity between books, stocks and health care? All are information-intensive and all involve constant transactions from massive inventories. Amazon likes to point to the 4.5 million titles in its bookstore. Stockbrokers have to keep track of thousands of securities that they need to stock and sell in real time.
Already, there are 16,000 health information sites on the Web, says Piper Jaffray's Marhula, and 43 percent of Americans are using the Internet to search for health information.
The brokerage industry was stunned by the willingness of people to take over their own accounts with online trading. But frustration with the health care industry will come as less of a surprise. Marhula sees the Web as a way people are regaining control, citing a Piper Jaffray report that 76 percent of Americans agree "people should take primary responsibility for their own health and not rely so much on doctors."
"The level of frustration most Americans feel with the health care system germinates from a lack of information and control in care and treatment," he said. Consumers' "desire to educate themselves on health-related topics" will help transform the business, making them more active participants in health issues. Most would like to manage health care benefits online, according to the market research firm CyberDialogue.
Another researcher, Yankelovich, found that nearly half of Americans are not satisfied with the availability of their doctors or with the time they spend with them.
Enter Dr. Koop and the Internet medicine show. Former Surgeon General C. Everett Koop made a big splash (and boosted his personal wealth by $50 million) with an initial public offering that turned his trustworthy name into Internet gold. His Web venture drkoop.com <KOOP.O> (http://www.drkoop.com) is just one of many ventures trying to dispense health information and services over the Web.
"There are a lot of Dr. Koops out there," said Merrill's Henry Blodget, who thinks that clear leaders will emerge in each e-commerce sector, while many others will fall by the wayside. Blodget, one of the Internet's biggest backers on Wall Street, has been sounding a cautious note about Internet stocks, saying the e-commerce business "can support 10-20 big companies, not hundreds of them." Meantime, the Web stocks mania is funding a wave of competitors who will fight to the death.
Marhula says consumer-oriented sites will have a place, but they will be swimming for recognition in a sea of sites offering advice. "The large sites will dominate," he said.
The more promising segment, though, is the health care enterprise companies that are trying to link the "highly fragmented" world of doctors, insurers and patients into a more rational system. The two main players in this segment are Healtheon Corp. <HLTH.O>, which recently agreed to acquire WebMD, and CareInsite <CARI.O>, which went public last week in a stock offer that soared 80 percent on the first day.
Those companies are aimed at a fatter part of the $1 trillion health care market; billing and bookkeeping account for $200 billion alone. Marhula figures that just the technology to track those costs will be worth $22 billion in three years, and it's growing at 18 percent a year.
When you look at what Amazon.com did in the low-growth books market, the faster-growing health technology segment appears to offer even greater promise.
But health will offer special challenges that book buying didn't: Entrenched insurers with antiquated non-Internet information systems, physicians who prefer the sublime chaos of paper piled on their desks to the efficiency of electronic systems. Oh, and the always courteous health care workers who greet us at hospitals and doctors' offices and insurance companies. NOT.<<
Ps
The only problem I have with Blodgets comments is his marvel about Amzn's revenue growth. Yes, its true that Bezos took a dead industry and took it to 1.5 bil in sales.
If Burger king (over 2bil in sales) did the same to the Dairy Queen (over 1bil in sales)and started selling burgers below their cost. Burger King could too.
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