Some Information I didn't see posted here previously re. Medsite. I found it interesting and more relevant than the reform party manifesto that would probably appear here shortly in its place. Please people can we leave the politics at the door...
This is from the dowjones.com site:
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From managed care to physician Web site
An ex-Prudential executive gets on board at Medsite as its chief financial officer.
By Bob Cook, American Medical News staff. Oct. 18, 1999.
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Medsite seems to be an anomaly among Internet health care companies. The site, which focuses on physicians, was founded in 1995; yet the company is still a small, privately held operation, not a public juggernaut like many other sites.
To change that, New York-based Medsite in September hired Gregory Scott as chief financial officer. Scott previously held the same position at Prudential HealthCare, which disappeared when Aetna U.S. Healthcare closed its billion-dollar purchase of the unit on Aug. 6.
Scott has contacts on Wall Street, which could be good for Medsite. But he realizes his managed care past with Prudential may not endear him to the physician audience Medsite is trying to reach.
"I hope my past doesn't work against me in that regard," he says. American Medical News' Bob Cook contacted Scott by telephone at his Greenwich Village office Sept. 22 to discuss Medsite and the future of physicians on the Internet, as well as the past and future of managed care.
Question: What was the appeal of joining Medsite?
Answer: As I tried to evaluate this as an opportunity, I had to like and have confidence in the people who were running the show here, and I had to have a lot of confidence in the basic business model. On that score, Medsite scored very high.
Question: What is Medsite looking for from you?
Answer: Euphemistically, it's called gray hair. [Scott is 46 while Medsite Chairman, CEO and President Sundeep Bhan, 27, is only a few years removed from the University of Pennsylvania's Wharton School of Business, where he and three others founded Medsite.) We want to see this grow. If I thought this were a lark or a short-time arrangement, I wouldn't have an interest. We can be a provider and consolidator in this space, which is targeting the physician audience. [Two weeks before Scott said this, Mediconsult.com, a physician services site, acquired Physicians Online, a pioneer in physician-centered computer networking, for $180 million in stock and assumption of debt. But most of the noise in the Internet market has been with consumer sites. For example, the value of the Mediconsult.com-Physicians Online merger didn't come close to the proposed merger between Internet health bellwether Healtheon and consumer site WebMD, a deal that has been valued between $2 billion and $12 billion.]
Question: Why haven't the physician-based sites taken off like the consumer sites?
Answer: [Consumers are] viewed as a larger market. People looking at the physician marketplace will say, 'Hmm, a fairly limited market of people you're driving at.' The immediate reaction is, let's diffuse our efforts, let's reach a broader audience -- particularly those sites that are relying on advertising as their principal source of revenue.
[But] By being focused and catering to [the physician] market and listening precisely to what they want -- that's a significant market to build a sufficient enterprise. [Medsite started as MedBookStore, an online mechanism to buy medical books. It also includes financial management, e-mail, software and medical information services.]
Question: How large a market is there for physician Internet services?
Answer: The physicians in this country control a huge amount of the GNP. There are dollar flows in this marketplace that are significant now and are growing and will continue to grow, especially if you look at the population demographics. The delivery of health care is a booming business. Certainly not my colleagues here, but as we in the baby boom generation get older, this market is going to grow. I wouldn't begin to hazard to guess what the size is. Physicians and their practices will be significant consumers of information, supplies and books. In order to run a medical practice -- it's a business, and we intend to cater to the needs of running a physician practice as a business.
Question: At least recent history shows, though, that companies that focus on physicians tend to lose a lot of money, even though it's repeated like a mantra that physicians control 80% of the health care dollar.
Answer: The whole physician practice management company growth and ultimate debacle over the last few years just shows [that] at the end of the day, the physician is going to maintain control of the delivery of medicine in this country. And in many respects, that's the way it should be. If we can, in a nondirected fashion, make those practices more efficient; if we can, in an elective fashion, make the practice easier, make them better physicians, at a lower price, that's better than trying to pound doctors into submission in terms of costs and the way they operate their practices.
Question: But wasn't "pounding them into submission" part of your job at Prudential?
Answer: I think there's good and bad in managed care. It brought a lot of cost savings, and not all of it was payment. Not all of it was targeted toward the reduction of physician income. A lot of it was designed to wring waste out of the system. It was very successful in the early years. The real question is what happens in the next generation of managed care, because further squeezing the physician or provider infrastructure is not going to reap the benefits it did in the early years. The place to win this game is to make the delivery of medicine more effective, instead of contracting power.
Question: How would the Internet make medicine more efficient?
Answer: I think the Internet is a revolutionary distribution system in this country in general. And physicians are part of that. If there are more efficient ways to tie doctors together, it will result in more efficient delivery of medicine and higher quality medical care. If physicians [can] spend less time worrying about dealing with their business practices and more time treating their patients, we're all better off.
Question: You were Prudential's CFO when the company sold off its group practices [from 1996 to 1999]. What lessons do you take from that experience into your new job?
Answer: We set those practices up in a manner [in which], in the long run, they could have been stand-alone businesses. The lesson is that setting physicians up to run their own practices, making them compete in the marketplace and then teaching them how to be better businesspeople, works better than trying to jam them into a corporation environment. We certainly saw that, having been under the wing of a big nationwide HMO, these practices were not market-competitive any longer from a cost standpoint. Our goal was to move them into an arena where they were market competitive.
Question: If the Internet can make practices more efficient, does that make small practices more viable?
Answer: The size-of-practice issue really stemmed from the feeling -- and I'm not saying it was a feeling that wasn't predictable, if you will -- that in order to face off against a larger MCO from a contracting standpoint, you had to have safety in numbers. I think that's an OK model; [Medsite] can help make group practices and IPAs more efficient. We're not attempting to get into the fray, should you be small or large in contracting.
Question: So is the company's success predicated on physicians themselves using the site?
Answer: It has to be physicians using the site. For some of our products and services, the physician will direct the office manager to the site. We're trying to capture the entire practice. [Marketing to physicians only] is part of the appeal of our story. It's a very easy, very clean, very neat story to tell a group of prospective investors. It's bigger than a sound bite, but it's not a rambling dissertation on how we're going to take over the world. We want the physicians to believe this brings them a value-added in their lives and their practices.
Question: Have your opinions about physicians changed from your time at Prudential?
Answer: I don't think so. Even in my days at Prudential and within the MCO we always had a tremendous amount of respect for the physician-patient relationship and an understanding of the importance of that. Sometimes that got lost in the mix in managed care, but not always. We always attempted to be mindful of that, though to the outside world it may not have appeared that way. This is a platform where we can be more physician-friendly in practice and in marketplace perception. I think the MCOs had a bad rap to some extent. Maybe some of it was deserved, but not always.
Question: Do you expect your relations to be less prickly than they would have been at Prudential?
Answer: I hope that's the case. We want them to be our consumers and our partners. Medsite can be part of the solution to the problem that has existed in the past few years in terms of the factionalization in the health care delivery world. We feel we can be part of the solution rather than part of the noise. |
