03-07-2008

Technology executives know they're onto something when Google shows up as a competitor. So on Feb. 28, when Google Inc. jumped into the nascent market for online health information with its long-awaited Google Health beta site, two local Internet companies -- Revolution Health Group LLC and The HealthCentral Network Inc. -- saw validation as well as new competition.

All are jockeying to displace front-runner WebMd Health Corp. as the No. 1 provider of health-related information, tools and support networks. Both D.C.-based Revolution, backed by AOL co-founder Steve Case, and Arlington-based HealthCentral, led by Chris Schroeder, former Washington Post-Newsweek Interactive publisher and chief executive officer, claim to be formidable rivals to unseat New York-based WebMd, founded in 1995 and today worth $1.5 billion.

While WebMD, Revolution Health and The HealthCentral Network are trying to win over patients' hearts, minds and page views with expert information and a sense of community, Google ­­-- like Microsoft Corp., which launched HealthVault in 2007 -- is trying to solve the more vexing problem of creating a viable platform to store patients' electronic medical records.

More than 10 million users visit RevolutionHealth.com each month, compared with WebMd's 19 million, Everyday Health's 14 million and AOL Body's 12 million, according to January rankings by ComScore. Nevertheless, Revolution Health announced in February it had achieved the title of No. 1 online health property when its site reached 256 million page views in January, beating WebMd by that measure.

Timothy Davenport, Revolution's president, said his company is neck and neck with WebMd and January's metrics demonstrate the momentum Revolution has generated since its launch last year.

Pacing Revolution is The HealthCentral Network's collection of properties, including 32 condition-specific sites, with more than 11 million monthly visitors and 60 million page views, according to Schroeder. "This makes us the leading, quality, targeted online health alternative to WebMD."

A third of the U.S. Web-surfing population goes first to the Internet for medical information, according to the Pew Research Center, but getting users to spend more time managing and monitoring their health lifestyle online could take years. And generating revenue from these Web sites hasn't been easy because advertisers have been slow to shift from traditional to interactive media, says eMarketer senior analyst Lisa Phillips.

Key to creating repeat traffic on sites like Google's and Microsoft's is getting people to trust a private company to store and handle their medical records online. The back-end obstacles also are considerable, so much so that Davenport and Schroeder agree a fully developed electronic medical records application remains at least a decade away.

"It's going to require solutions from private companies, public policy mandates, maybe even government [support] to bring it all together," Davenport said.

Google's new site includes partnerships with several hospitals and clinics to synchronize thousands of medical records. Microsoft's relies on independent, individual submissions. The company also has created a $3 million "Be Well Fund" to promote research and development of additional tools for HealthVault.

Eventually, electronic health records will be a major investment area for Revolution Health, Davenport said.

The HealthCentral Network, however, does not have plans to adopt the feature. It will remain "steely focused" on content and community, Schroeder said.

"We want to build and partner with the most trusted online environments in health content and community -- condition by condition, wellness issue by wellness issue," he said.

Revolution and The HealthCentral Network see themselves as one-stop shops for health information, much like WebMd has been, but more community and lifestyle oriented with health management, community building and e-commerce tools.

However, Revolution and The HealthCentral Network take slightly different approaches to creating an audience and generating ad-supported revenue.

Bankrolled by Case, who has invested $500 million in parent company Revolution LLC, Revolution was forced to cut its workforce by a quarter to 180 employees in January and has retooled its strategy a few times since it began in 2007.

Schroeder was brought in to restructure ChoiceMedia when Sequoia Capital, The Carlyle Group, Polaris Venture Partners and Allen and Co. bought the company in 2005. In January, The HealthCentral Network received funding reported to be in the range of $50 million from Barry Diller's Inter Active Corp., along with its prior investors, and plans to use a significant portion for acquisitions. The company now has about 50 employees.

Unlike Revolution, The HealthCentral Network is not a multifaceted portal, but rather a collection of individual sites based on specific medical conditions. By very narrowly targeting the user, Schroeder says, there is an opportunity to create greater return for the advertiser.

All parties are hoping for a flood of big-dollar pharmaceutical advertisers. Drug companies today spend more than $12 billion on advertising, a figure that does not include Internet ads, according to eMarketer. Online pharmaceutical and health care advertising is estimated to reach

$2.2 billion in 2011, still a small portion of the industry's ad dollars and only 5 percent of total U.S. Internet ads, says the research firm's Phillips.

Drug companies have been slow to adopt Web advertising out of fear that ads might appear next to unsupported statements by patients or others about their products, in possible violation of FDA rules.

Even so, advertising dollars are crucial to the business model of the online health services. Revolution had planned to make certain services subscription-based but has decided to keep the entire site free. And Google, of course, is counting on its Google Health portal to drive ad traffic on its Google AdSense network.

"I'm bullish on interactive advertising," Schroeder said, "Advertisers are looking for alternatives to advertising on WebMd as they begin to shift to interactive media and as there are more options."

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2008/03/10/story2.html?b=1205121600^1601826&page=1