Healthcare First Look at whether Web services will kill WebMD.
You know WebMD is big in clearing claims -- 78% of the plans we spoke with use their services. But what might surprise you is the extent to which plans are chaffing at the high prices and poor service they get from clearinghouses -- WebMD in particular. We estimate that plans are paying some $414 million annually to clear physician and hospital claims alone. With that kind of money in play, it's no wonder that customers are considering regional hubs and direct connections as alternatives to the national vendors.

HIPAA and the Internet are no magic bullets. Standardized transactions and code sets combined with the Internet's universal connectivity has payers and providers asking whether clearinghouses are destined to go the way of the bank teller and travel agent. Not so fast. While industry standards and improved infrastructure will surely ease the pain of integrating payer and provider systems, this is only HIPAA's and Web services' first inning. Until the regulations mature and consolidation hits the market for provider's financial apps, plans must keep national clearinghouses honest by adding regional hubs and selective direct connections to their mix of claims-clearing resources.

The EDC market is down to two vendors. Both large pharmaceutical and smaller biotechnology companies have bought into the concept of making their clinical trials more efficient by using electronic data capture software. But customers and experts alike say electronic data capture (EDC) software isn't ready to support the clinical trial needs of large pharmaceutical companies. They're right. Only Oracle and Phase Forward can compete with homegrown solutions, and these products need work. What needs fixing? Even the leading apps suffer today from inconsistent interfaces, a lack of standard development tools, and overlapping data architectures, hardly the stuff of a mature application market. Forrester believes that the showdown will occur this fall, with Oracle's new product -- sporting a refreshed architecture -- going head-to-head with Phase Forward.

Who buys prescription drugs online? Today, 64% of US households go online at least once a month. But with the Net's reputation for attracting young, spunky technology optimists, how important is the Web as a channel for selling prescription drugs? Medicare members looking for deals and diabetics looking for convenient refills lead the charge. Online members of the major commercial health plans who bought prescription drugs online in 2002 ranged from a low of only 9% of Humana members to a high of 17% of Aetna members -- or 21% and 35%, respectively, of each plan's prescription takers.

We are very interested in your feedback on our research. Do you have topics to recommend, data you would like to have, or technologies you want assessed? Drop me a line with your input at bradholmes@forrester.com.


Brad Holmes
Healthcare Research Director

Research Referenced In This Issue If you printed this email, get links to the research featured in this week's issue by going to www.forrester.com/go and entering the five-digit number of the report you'd like to read. Pharma: The EDC Market Is Down To Two Vendors (16959) Who Buys Prescription Drugs Online? (16952) Will Web Services Kill WebMD? (16338)

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