Vital Signs - Page 2


Efficient Health Care?

This year, people in the U.S. Will spend $1 trillion on health care — $1 out of every $7 spent in the U.S. economy. Estimates of the cost of waste, inefficiency and duplicate paperwork range from $150 billion to $250 billion, or 15 percent to 25 percent of all health-care spending.

In three years, the Internets efficiencies and paperwork savings can knock administrative costs down to single digits, saving more than $50 billion, said Tom Beauregard, chief strategist at Sageo, an e-health portal.

That can buy a lot of technology and Internet-based e-health. And dozens of companies are ready to sell it.

Already, billions of dollars are being made — and lost. E-health companies last year lost $4 billion, while generating revenue of $1.77 billion, according to Corporate Research Group. Revenue is expected to top $2.4 billion this year, and reach about $3 billion next year.

Medical supplies distributor Cardinal Health expects revenue from its e-business platform to climb tenfold this year, to $1.5 billion. The companys customers continue to migrate to the Internet from traditional electronic ordering systems, said James F. Millar, Cardinals executive vice president and president of distribution. Cardinal uses Internet technology to automatically replenish inventory for its business customers, and its handheld and wireless technologies scan and transmit delivery information via the Internet.

Cardinal, with a market capitalization of $29 billion, is near its 52-week high, with its stock worth $98 per share on March 12. But one of its competitors,, which has a market capitalization of $220.4 million, was trading at $1.40 per share earlier this month, down 95 percent from its 52-week high.

Dot-coms dedicated to health care will continue to tank this year, as established health plans, brick-and-mortar procurement companies and hospitals muscle them out of the way — much as the Wal-Mart Stores and Kmarts elbowed the pure-play e-commerce retailers, said Carl Mercurio, editor at E-Health Insider, a Corporate Research Group publication. "Anyone who can provide Internet-based technology that helps health-care organizations do things faster and better is going to have success."

Companies hoping to become examples of that success include Agilent Technologies, Enact Health Management Systems and LifeScan, which have products that can monitor asthma, glucose or heart problems, and zap the data to nurses or doctors across town or across the globe.