Online Healthcare Sales To Reach $370B by 2004

Business-to-business (B2B) transactions will propel the online healthcare industry to reach $370 billion (US$) by 2004, according to a recent study by Forrester Research, Inc.

The study predicts that business-to-consumer (B2C) retail sales will comprise only $22 billion of the total, a paltry eight percent. The remaining 92 percent will be made up of B2B transactions amongst health care providers and their various suppliers.

With more than 20,000 health-related Web sites that were visited by more than 26 million people in 1999, the study contends that the Internet is becoming the foundation for a new healthcare industry infrastructure that supports complex, multiparty transactions among consumers, providers, insurers, and medical suppliers.

Prescription Drugs To Dominate Retail Health Sales

With 32 percent of online consumers already shopping for health products on the Web, Forrester says that online health sales are going to continue their rapid growth to about $22 billion in 2004.

The study shows that prescription drugs will dominate the category with $15 billion in online sales, as Web pharmacies, insurance carriers, and doctors address reimbursement and liability issues. Over-the-counter (OTC) drugs and health/beauty aids are expected to contribute $1.9 billion and $900 million, respectively, to the online retail category.

Concerns About Escalating Healthcare Costs

“Consumers and businesses alike are being driven to the Internet by concerns about escalating healthcare costs,” said Elizabeth W. Boehm, associate analyst in Healthcare On-line Research at Forrester. “Although most business activities are stove piped today, Forrester expects that the Internet will topple communication boundaries between consumers, providers, insurers, and health product distribution chains.”

To break down the barriers between industry players and enable new levels of collaboration, Forrester said a healthcare B2B network will be formed, creating a resilient fabric of interdependent healthcare players linked in real time over the Net. Forrester said this network will dominate online transactions.

As more business moves onto the Net, the study predicts that the B2B network will bring together isolated industry players and enable new levels of collaboration. Medical labs, for example, will use the Internet to streamline the reporting of results to doctors and then expand services to patients, according to the study. Similarly, the study said that consumers will be able to select their preferred online pharmacy for prescriptions, which will carry forward in their patient profiles.

Riding The Trend

LaurusHealth is an example of a how a B2B health care site might operate. The site is designed to help member health systems enhance relationships with their consumers, physicians and payers through information sharing. The site says it provides reliable, easy-to-understand information to help consumers make more informed decisions about their health.

BluePrint for Health is another company that is capitalizing on this trend. The site is run by Blue Cross of Minnesota and claims to provide one-stop shopping for “reliable, trustworthy and confidential” health information.

“Every day consumers search the Internet for answers to health questions about everything from earaches to heart disease to organ transplants,” according to Dr. Bill Gold, Blue Cross Chief Medical Officer.

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