From Red Herring
April 04, 2000 06:01
Health plan insurers take on Web health care
New Web initiatives being pursued by two groups of major health insurers and product suppliers appear to be putting young Internet health-care companies at risk. A consortium of six health insurance companies are banding together to create a Web site called Medunite that will serve as a link between insurers, doctors, and patients. The project, planned by Aetna U.S. Healthcare (NYSE: AET), Cigna (NYSE: CI), Wellpoint Health Networks (NYSE: WLP), Oxford Health Plans (Nasdaq: OXHP), Foundation Health Systems (NYSE: FHS), and Pacificare Health Systems (Nasdaq: PHSY), will compete with new Web companies such as Healtheon/WebMD (Nasdaq: HLTH) and Drkoop.com (Nasdaq: KOOP). The health plans' site is being designed to allow patients to sign up for insurance and choose doctors online while also allowing them to take care of such administrative tasks as paying their deductibles. Meanwhile, five companies -- Johnson & Johnson (NYSE: JNJ), Baxter International (NYSE: BAX), Abbott Laboratories (NYSE: ABT), Medtronic (NYSE: MDT), and GE Medical Systems (NYSE: GE) -- hope to launch by summer a new Web site that will serve as a product and supply exchange, competing directly with su ch new companies as Neoforma.com (Nasdaq: NEOF), Medcenterdirect.com, Promedix, and Broadlane.HEALTHY OPERATIONSThe elder health care companies are beginning to realize how the Web can streamline operations and lower costs, says Sheryl Skolnick, an analyst with Robertson Stephens. "The legacy companies are starting to figure it out," she says. "They perceive they have a common enemy, and that's what has galvanized them."News reports about Medunite have helped drive down shares of Internet health care companies, such as Neoforma and Healtheon. A pending deal between health insurers was widely rumored for several weeks, consequently helping to drive down share prices of Internet health care companies.
For example, Healtheon closed at $21.25 Monday, from the mid-$70-per-share range two months ago. Healtheon is considered an online industry leader with its electronic marketplace. It has gobbled up competitors and signed thousands of doctors to use its site. But a standoff of sorts is being created with insurance companies moving into the market. On one side are companies such as Healtheon, and on the other side are insurance companies. Each needs the other to create a successful electronic marketplace."In the near term, there's going to be more fragmentation in the market," says Dain Rauscher Wessels (NYSE: DRC) analyst Jeffrey Peters. Mr. Peters last week downgraded Healtheon from a Strong Buy to Neutral. He says, "There's going to be a lot more consolidation."Discuss tech news and trends in the Tech Trends Spotlight discussion in our Think Tank discussion forum, or visit the Discussions home page. |
