Do you remember Healtheon? It was the company founded by the legendary entrepreneur Jim Clark (his 3rd billion-dollar venture, after SGI and Netscape), with backing by the legendary VC John Doerr. The idea and the company’s early stages were chronicled in the book The New New Thing by Michael Lewis.
Healtheon had an impressive promise: the trillion-dollar diamond made famous in Lewis’s book. The company would be situated in the middle of the busy intersection of patients, providers, pharmaceutical companies and insurance companies (payers). It went public (HLTH). The stock went over $100 in bubbly 1999.
Then what? As a public company, in May 1999, it merged with the private medical content site WebMD, eventually takings its name. Today it’s a medical information portal, with its stock price floating around $10.
Have you paid attention to your dealings in the healthcare sector lately? Last week I received a bill for care that was provided over 3 months ago, which I had already paid. Next time you are in your primary care physicians office, observe the office environment. Take note of the stacks of files and paper. Then, talk to your doctor about his practice costs. We have not even gone into the litigation system in the HC industry…
To make a long story short, the sector is inefficient and burdened by excessive litigation, driving the costs to record increases. HLTH had a good idea, but apparently the bubble busting and the industry’s resistance to transparency and efficiency, combined to marginalize the company into a content provider as opposed to a transaction enabler.
Too bad for all of us. I am looking forward to see the next set of superstars to tackle this messy area.