BUSINESS

Spinning a wider web: The rising fortunes of WebMD

The one-time dot-bomb is connecting with more and more physicians. Is it growing too powerful?

By Tyler Chin, AMNews staff. Feb. 9, 2004.

When WebMD Corp. stubs its toe, physicians howl.

Doctors around the country are feeling the pain as WebMD experiences problems transmitting HIPAA-compliant claims to insurers, creating serious cash flow problems. WebMD isn't the only company having that sort of trouble, but it's the biggest, so it's generating the most complaints.

The idea of WebMD having that impact on physicians seemed far-fetched a few years ago when it appeared the firm might be another dot-com bomb. Its corporate predecessor, Healtheon Corp., in 1999 promised to revolutionize health care with its consumer and physician health Web site, and at the company's peak had a multibillion-dollar market capitalization. Fortunately for the company, it put its sizzling stock to use in buying the practice management software and claims clearinghouse companies that form its core today, allowing it not only to survive the dot-com crash but become a powerful force in health care.

Elmwood Park, N.J.-based WebMD still is the biggest player in the online health information business for consumers and physicians. It also is the market leader in the physician practice-management software market. And it dominates the medical transaction market, processing more than 2 billion electronic transactions annually for more than 1,500 insurers and 300,000 physicians, hospitals, dentists and pharmacies.

"They are the 800-pound gorilla in those markets," said Mark Bard, president of Manhattan Research, a New York City consulting firm. "That's not going to go away and it's something that will increase year by year."

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