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With experts predicting that some 30 million Americans will go online for health information by the year's end, it is not particularly surprising that nationally recognized doctors have teamed up with Internet entrepreneurs to get a piece of the $1 trillion health-market pie and make a fortune off publicly traded, health-related Web sites.
Yet some health Web sites, such as drkoop.com, chaired by former U.S. Surgeon General C. Everett Koop, and Medscape.com, led by Dr. George D. Lundberg, former editor of the Journal of the American Medical Association, are coming under increased scrutiny for failing to disclose the profitable nature of their partnerships with hospitals and pharmaceutical companies. Oftentimes what constitutes an advertisement on these sites and what constitutes medical advice or information seems to be an intentionally blurry business.
Koop's site in particular has been blasted for not fully disclosing its sponsorship arrangements. The New York Times reported in September that 14 hospitals described by drkoop.com as "the most innovative and advanced health care institutions across the country" had paid approximately $40,000 each to receive the endorsement.
Koop also has come under fire for failing to give notice that he was receiving a 2-4 percent commission on products and services sold through his site. As of August 27, he discontinued this arrangement, in an effort, one would assume, to appear more like a doctor and less like an Internet entrepreneur. Yet an Internet entrepreneur he certainly is. When drkoop.com went public in June, Koop increased his net worth by an estimated $20-25 million.
As if all this were not enough, Koop's reputation as "America's family doctor" received another gash in October, when national papers reported that he testified at a March Congressional hearing that latex medical gloves were safe, without disclosing he had received money from one of the biggest glove manufacturers.
Koop says he does not believe he has been involved in any conflicts of interest. In September he told The New York Times, "I didn't go into drkoop.com to make money. I did it to change the way that medicine is practiced, to bring important information to patients faster and get them more involved in decisions about their health."
Even so, like all Web companies, drkoop.com is working just as hard making deals to improve its brand recognition and profitability as it is providing medical information to its 15 million monthly page viewers. On November 12, drkoop.com announced it had signed an agreement with Creative Artists Agency, known primarily for its success representing Hollywood actors and writers, for the purpose of developing "traditional and new media strategic alliances to extend the drkoop.com e-health brand."
Drkoop.com has already forged a deal to be the exclusive health content provider on three of Disney's GO Network's Web sites -- Go Health Center, ESPN.com Training Room and the Family.com Health Channel -- as well as on ABCNEWS.com. And in July the site agreed to pay America Online $89 million over four years in return for featuring its brand and health content on AOL's five portals: the AOL Service, AOL.COM, Netscape Netcenter, Digital City and CompuServe. The result: the value of drkoop.com shares shot up by 56 percent. Such synergy has been only too good for drkoop.com: in the third quarter of 1999, page views on drkoop.com increased 46 percent to 40.4 million and revenues jumped by 186 percent to $2.9 million from last quarter.
Drkoop.com business practices and success may be the most eye-popping example of no-holds commercialization in the brave new world of health Web sites, but it is by no means exceptional.
One of drkoop.com's competitors, Medscape.com, which also provides a combination of commercial and information services, though primarily for doctors and health care workers, racked up net proceeds of $54.4 million through an initial public offering. Medscape has since created a joint venture with the CBS Corporation to create CBSMedscape.com, a sister site which will be targeted at health-concerned consumers. In exchange for a 35 percent stake in Medscape, CBS is providing $150 million worth of TV, radio, print and outdoor promotion, including mentions in CBS news shows.
Medscape also has made a $33 million deal with America Online and has received a $10 million cash investment from National Data Corporation, the world's largest health information company. Visibility, it seems, will not be one of Medscape's problems.
Nor will the problem of maintaining revenues, the plague of many content sites. Medscape is keeping well above water by exacting healthy revenues from advertisers. Its home page advertises and links to two commercial health sites, Drugstore.com and Medsite.com, and it offers advertisers the ability to sell their products to targeted demographic groups specially crafted by Medscape.
Moreover, the site is offering healthcare workers the services one might find through an investment bank. It is advertising a "free Money and Medicine MedPulse" service, which provides doctors "tips for managing your money and your practice," and a "free Medscape portfolio," "which tracks your investments and monitors the stocks you are thinking of buying."
Another site that have come out ahead in the electronic health business is Healtheon / WebMD, a publicly traded medical administration and information site founded by former Netscape head Jim Clark. On November7 Healtheon/WebMD formed a $1billion partnership with Rupert Murdoch's News Corp in what is being called the largest media and Internet deal to date.
In exchange for $700 million in "branding services" over 10 years and a $100 million cash investment in Healtheon/WebMD, News Corp is taking a 10.8 percent stake in the Web site, purchasing $100 million of Healtheon/WebMD stock at $50 a share. Beyond the enormous price tag of this partnership, what industry watchers are surprised by is that in addition to its enormous investment News Corp has signed a five-year, $62.5 million licensing deal to syndicate WebMD's daily content. This means that for the first time content created on the Web will be a regular, original source for print and broadcast media.
Dropping to second place in the high stakes Internet health game is now PlanetRX.com, a site that sells prescription drugs, vitamins and medical supplies. When it went public last month, PlanetRX.com was valued at $950 million. And even the American Medical Association is planning to get in on the act. The AMA is said to be in the process of raising $40 million to launch a consumer health Web site in early 2000 that it will eventually take public.
All this scramble for gold makes one a little weepy-eyed about the days when doctors relied on unprofitable medical journals for information and people were referred to as patients not consumers. But, according to medical ethicists and industry watchdogs, the chief problem raised by health Web sites is not that they are driven by market forces but that market forces have created a situation where no standards exist for advertising, privacy and content.
"To my mind, the basic issue is about the inappropriate blurring of the line between advertisers and editorial content," said Dr. Joshua Hauser, a medical ethicist at the University of Chicago, who was among the first to notice that drkoop.com's endorsement of several hospitals smelled fishy. "It is often difficult to tell where the information is coming from, whether it has been peer-reviewed by reputable doctors or whether it is a cover for a company that has a business arrangement with the site."
Hauser is also concerned about how medicine is being practiced online. He points out that now it is fairly easy to get a prescription for Viagra from a random Internet doctor and that people may be getting medical advice from Web sites rather than seeking it at their doctor's office.
This raises a host of legal problems for health Web sites. According to Jeff Snyder, an attorney specializing in health care practice at the firm of Hogan and Hartson in New York, generally accepted medical standards may change with the new technology, but in the meantime legal questions for health Web sites are at a pivotal point.
"There is a big question as to whether these Web sites are licensed to do what they're doing," said Snyder. "If they are providing information, i.e., no diagnosis, then that's okay. But if they are actually providing medical care to people, they must be certain that, one, their doctors have a license to practice online and, two, their doctors are not practicing across state lines without authorization from their state licensing boards." Snyder adds that once a doctor-patient relationship is established, a physician is subject to a host of obligations. For example, they must treat the patient and must keep medical records for a certain number of years, something which is highly unlikely considering the transient nature of the Web.
Privacy and confidentiality have also become a big concern for those watching the development of the Web health world. More than 80 percent of U.S. hospitals now use the Internet, according to a 1998 survey by Deloitte & Touche, and as more people become reliant on the services of e-health commerce companies for pharmaceutical orders and refills, there is concern that medical records will be far from private. Although health sites have begun posting guarantees of confidentiality, Dr.Richard Sobel, a Harvard political scientist specializing in health issues, has warned: "Anything available online is theoretically available to a larger group than it's meant to be."
Sensing that the din of criticism about Web healthcare is getting stronger and stronger, leaders of the top health Web sites met in mid-November to address the lack of ethical standards for their industry. The Hi-Ethics Alliance, which was assembled by Dr. Koop and includes representatives of 15 companies such as drkoop.com, American Online, WebMD Inc., Healtheon and Medscape, has formed working groups that will create policies for privacy, advertising and content and will meet once a month for the next five months with the goal of releasing a set of ethical principles by the end of March 2000.
Although industry watchdogs are encouraged that the Hi-Ethics Alliance has formed and is taking steps to rein in their Web site practices, many are dubious that rules set by such a coalition will be influential.
"I don't think a self-refereeing system would work," said Thomas Rindfleich, director of the Lane Medical Library at Stanford University. "There is no way to police content on the Internet. Unfortunately, I think we'll have to wait for a Three Mile Island-like event to take place before something significant happens."
Rindfleich believes that the "best offense" for finding medical information on the Web "is defense." He recommends that consumers look to groups with nationally recognized reputations like the National Institutes of Health, which includes reports and studies from more than 100 government databases, and Medline Plus, the database of the National Library of Medicine. These sites are supported by the federal government and are free of advertising.
But can publicly traded, advertiser-supported health Web sites provide unbiased information and safe services for the 30 million Americans who are currently going online for health information?
For some, the answer is absolutely not. Gary Cohen, director of Healthcare Without Harm, an international coalition of 180 organizations of health workers, advocacy groups and environmentalists, is adamant that "the soul of medicine is being destroyed by commercialism." "For more than 10 years pharmaceutical and medical companies have been driving the direction of medicine toward profits and away from the focus on prevention and illness," he said, "and medical Web sites seem to be equally complicit in this trend."
For others, health Web sites are providing Americans with the informational tools they seek to improve their health and learn about what ails them. "We spend one seventh of the GDP on health," said Dr. Hauser. "The fact that Medscape and Koop have captured a piece of the market is not surprising. The potential opportunities they give to patients are tremendous, but my hope is that they can respond to that need without caving to commercial arrangements and presenting biased information."