Step into a medical office, and you're faced with a paradox of modern medicine. Just beyond the receptionist's desk are all sorts of cutting-edge medical technology. Computed tomography scanners. Electrocardiogram machines. Bone densitometers.
But as you approach that desk to check in, you take a trip back in time. There the receptionist hands you a clipboard of forms. For the umpteenth time you fill in your name, age, allergies, medical history, and the like. For all the medical breakthroughs created by technology, medical records remain an anachronism.
That's changing as more companies vie to bring medical records into the Digital Age. WebMD Health Corp. (WBMD) and insurers such as Aetna (AET), United HealthCare (UNH), and WellPoint (WLP) have provided electronic medical records to policyholders for years. More recently large employers such as Wal-Mart (WMT) and AT&T (T) have been banding together to offer electronic health record systems. Revolution Health Group, led by former America Online (TWX) boss Steve Case, is trying to crack the market, as is search giant Google (GOOG).
Now, Microsoft Corp. (MSFT) is joining the fray. On Oct. 4 the software giant is scheduled to launch a search engine-supported service to help patients coordinate disparate pieces of health-care information, from lab results and prescription records to X-rays and daily blood pressure and allergy readings. Aware that patients are skittish about putting the most personal data into a file server that's potentially available to prying eyes, Microsoft promises that patients alone will control access to their health information.
Privacy concerns aren't the only reason Microsoft may have a tough go of it. Patient health records are about as resistant to information technology as the common cold is to a cure. Doctors with small practices haven't always been keen to make the investment in computer systems when the payoff seems so unclear. Few hospitals have bothered to set up systems to retrieve data from patients' electronic files.
Perhaps the biggest hurdle, though, is that there isn't any real economic incentive to digitize data. Paying for the computers that handle and store medical data, not to mention training office staff to use the systems, costs money. And the financial payoff is uncertain, at best. Dr. Robert A. Jenders, an internist who also works in the medical information systems unit at Cedars-Sinai Medical Center in Los Angeles, says initiatives such as Microsoft's are encouraging. But the amount of training needed to switch over to computerized systems may be more trouble than it's worth for many time-stressed physicians. "Their office practice works very well as it is now," Jenders says. "And time is money."
Microsoft, though, figures it can succeed where others have stumbled. It has changed the economic equation so that hospitals and doctors don't need to invest in new equipment to use HealthVault, its online repository for patient health information. Medical records software vendors, such as Allscripts Healthcare Solutions Inc. (MDRX), have worked with Microsoft so that doctors using Allscripts' software can easily send files over the Web to HealthVault. Doctors' offices that don't use such software can securely fax the data into a patient's digital files.
To launch and build HealthVault, Microsoft has enlisted Peter Neupert. A Microsoft veteran, Neupert forged the deal that created MSNBC in the mid-1990s and later launched the online magazine Slate. He left the company in 1998 to successfully introduce Drugstore.com Inc., (DSCM) where he stayed until 2004 before rejoining Microsoft in the wake of the dot-com bust. Neupert, now head of Microsoft's Health Solutions Group, figures he can build a business that generates "a billion-plus" in revenue from HealthVault as well as another business that sells software to hospitals.
Microsoft is hoping it can make money on the service--which is free to patients--with help from a little box inside HealthVault's page, where consumers can search the Web. The box connects customers to a health-care search engine created by Medstory Inc., a Foster City (Calif.) company that Microsoft acquired in February. Unlike the traditional list of links produced by general-interest search engines such as Google or Microsoft's Live.com, Medstory queries generate health-specific information, grouped together under topics such as clinical studies, nutrition, and medication.
There's also a spot for sponsored links. And that's where Microsoft is betting it can make money. A recent Harris Interactive (HPOL) poll found that 76% of adults over 55 use the Web to help diagnose their medical conditions. Those queries generate $500 million to $1 billion in advertising a year, according to Microsoft's estimates. "It's all about search," says Neupert, who sees the market growing to $5 billion in five to seven years.
If Microsoft can funnel more of those queries through its search engine, it can easily justify the business and, in the process, gain a step on Google, which is pushing forward with its own health-care-records initiative. The search engine giant hasn't been forthcoming with details, but reports say its efforts have been delayed until at least 2008 following the unexpected departure of former Microsoft engineer Adam Bosworth, who was leading the charge.
Also working to Microsoft's advantage is that most medical information is already in digital form, ready to be gathered up in one place. Terabytes of electronic health-care data already exist, scattered on the servers of pharmacies, insurers, hospitals, and many doctors' offices. But the records typically are on disconnected systems. That's because the information isn't collected to help patients as much as it is gathered to make sure people are paid. With the data in one place, any doctor should have access to it.
But to get HealthVault off the ground, Microsoft will have to persuade people to opt in. Those with the most to gain may be patients with chronic ailments. Diabetics, for example, monitor their blood sugar daily with a glucometer, and many of the devices can connect to a PC so users can keep track of their readings. Microsoft has worked with one of the largest makers of gluco?meters, Johnson & Johnson Inc.'s (JNJ) LifeScan unit, to enable consumers to connect to HealthVault. That way, patient information could be instantly added to a person's medical records and, in turn, be made immediately available to the diabetic's endocrinologist.
Convincing patients that Microsoft can safeguard their data, though, won't be easy. Dr. Deborah C. Peel, the founder and chair of the consumer advocacy group Patient Privacy Rights, says she believes Microsoft's servers are about as secure as they get. That's because "if they spill the data, it would completely ruin" Microsoft's reputation, says Peel. "It would be like the Exxon Valdez."
Microsoft is willing to take that risk--and is betting that putting a trove of information in patients' hands will ultimately make money while improving health care. For Microsoft, HealthVault isn't so much a leap in technology as it is a smart business bet. "This isn't bleeding edge," says Glen E. Tullman, chief executive of Allscripts. "It's leading edge."
By Jay Greene, with Arlene Weintraub in New York and Robert D. Hof in San Mateo, Calif.