Consumer demand for online health-care delivery systems--everything from accessing medical advice to purchasing drugs to processing insurance claims--is reaching critical mass. That, in turn, is creating unprecedented competition within the industry as new companies promise to expand the market. They plan to sell new products and medicines, as well as services that traditional health-care suppliers don't provide, such as online pharmacies that deliver prescriptions the same day they're written.

However, the move to the Net has been slow going for the health-care industry. To date, Internet users can find a lot of online drugstores, sites that offer medical advice from doctors and experts, and drug-interaction databases. For business-to-business needs, there are medical suppliers selling everything from bandages to drugs in bulk; community Web sites for professional research and communication; and, in select hospital systems, there is Internet access for doctors to store and access patient tests. Online access to medical imaging for diagnostics is gaining popularity because the technology is established, saves time, and can facilitate better patient care.

A lot of desirable functions are still missing, however, including the storage of medical records, the sale of heavily regulated pharmaceuticals, and claims processing between insurers, consumers, and health-care providers. Experts say there won't be a true online health-care system without them.

But those developments may come about more quickly than expected now that online health care has become one of the hottest markets around. The pace of change is moving so fast that this relatively new market has already seen its first multibillion-dollar acquisition. Last month, Healtheon/WebMD Corp. said it would buy Medical Manager Corp. and its subsidiary CareInsite Inc.--an Internet health-care network for physicians, suppliers, and patients--in a stock deal worth more than $5 billion (Healtheon/WebMD Continued Buying Spree, InformationWeek, 2/21/00).

The combination of two of the leading online health-care companies creates a giant with a range of services and connections that can help move the industry to the Net more quickly. Backers include high-profile executives such as Jim Clark of Netscape, Bill Gates of Microsoft, and Rupert Murdoch of News Corp.

Healtheon.com is a jack-of-all-trades online health-care venture that sells medical supplies, delivers information to consumers, connects insurance companies to health-care providers for claims processing, creates a professional community for doctors, and promises one day to house secure medical records. Healtheon.com merged last year with WebMD, a consumer health-care information site, and has acquired or partnered with dozens of companies in the past 18 months. Now, the company claims links to 850,000 physicians, more than 85% of the practicing doctors in the United States.

Healtheon/WebMD won't win the market without a fight. A host of established companies and startups are battling to grab their own piece of the online health-care pie. Intel, for example, is working with the American Medical Association to put a database of doctors online so it's possible to identify authorized doctors for services such as online prescriptions and the business-to-business sale of regulated pharmaceuticals.

Well-financed newcomers are crucial to the health-care industry's online transformation. "The Internet startups like WebMD create communities, transaction mechanisms, and a business model," says Forrester Research analyst Elizabeth Boehm. "Once these communities are established, with all the mechanisms built, then the traditional health-care companies--including pharmaceutical companies, medical suppliers, insurance companies, and doctors--will have a place to do business."

There's no shortage of companies looking to build communities for the medical industry and consumers. HealthCentral.com, for example, offers a health-information Web site and more than 90 E-mail health and fitness newsletters; the company says it has more than 1 million subscribers. The Corporation for Standards & Outcomes has introduced SumOne Passport, a system for tracking and providing access to information on all medical, behavioral, and support services for a patient. Digineer Inc., an Internet services company, has partnered with Complient to create a Web portal at www.complient.com to help companies, hospitals, and other organizations comply with laws and regulations involving workplace health, safety, and environmental conditions. Software company Confer Software Inc. offers online applications for disease management, case management, utilization management, and process automation.

Medicalbuyer.com lets anyone--including consumers--buy bandages, tongue depressors, stethoscopes, and a variety of other medical supplies in bulk. It also sells some nonregulated and lightly regulated drugs, such as flu vaccines, to authorized health-care providers. CEO Dr. Ed Rollins says he started Medicalbuyer.com last year because he was trying to buy medical supplies for his wife's private practice, and he couldn't find such a place online.

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