Industry Watch.

VIRTUAL EDUCATION

E-Learning Will Be Big Business

The Website for DigitalThink gives an inkling of the size of the e-revolution as it relates to education. The Vienna, VA, company posted an article quoting Cisco System's president John Chambers: "Education over the Internet

is going to be so big, it is going to make e-mail look like a rounding error." It also reported that companies such as itself, Black-board.com, eCollege.com, and Web Course Tools are overwhelmed with demand for their Web-based tools and virtual classrooms that extend academics and workforce training to anyone with an Internet browser.

Punctuating the notes were these forecasts: at least half of all companies will use Web-based instruction to meet employee training needs within the next three years (from e-learning market research Website BrandonHall.com), and 85 percent of universities will have online components by the end of this year (from International Data Corp.). For the full article, visit www.digitalthink.com.

Nursing Degree Through the Internet

The University of Wisconsin-Green Bay and healthcare Website NursingCenter.com are partnering to deliver a new online nursing degree program. BSN-LINC allows registered nurses to earn a bachelor of science degree (BSN) in nursing almost exclusively over the Internet. University registration fees are covered at no increased cost when nurses use the NursingCenter.com Website for continuing education courses. The Website will supply faculty-chosen course packs with full-text journal articles and a wide array of searchable nursing reference materials. The program is accredited by the National League for Nursing Accrediting Commission and has preliminary approval by the Commission on Collegiate Nursing Education. Visit www.nursingcenter.com or call BSN-LINC toll-free at 877-656-1483.

HIMSS SURVEY

HIPAA, Internet Deployment Are Top Priorities

Healthcare information executives will spend the remainder of this year gearing up for the Health Insurance Portability and Accountability Act (HIPAA) and working on Internet issues, according to the 11th annual HIMSS Leadership Survey sponsored by IBM Global Healthcare. In the survey, conducted online and at the recent HIMSS Annual Exhibition in Dallas, 70 percent of respondents said they will concentrate on HIPAA compliance over the next two years, but 62 percent said the most important priority for the next 12 months is deploying Internet technology.

Other short-term priorities of senior healthcare executives are upgrading network infrastructure (41 percent), and integrating systems in a multi-vendor environment (38 percent). Barriers to carrying out their IT plans? The most named difficulty was "proving a return on investment (ROI)," listed by 22 percent of respondents. This edged out the usual worst enemy, lack of financial support (21 percent)--even though nearly two-thirds of managers expected their IT spending to increase this year.

For more information on the annual survey, visit www.ibm.com/solutions/healthcare.

INFORMATION SECURITY

Coalition to Smooth Entry of PKI into Healthcare

Leaders of 23 e-healthcare organizations have formed a coalition to develop interoperable authentication specifications for Web-based healthcare transactions. With the growing push for widespread use of Public Key Infrastructure (PKI), coalition members want to develop a consensus among healthcare players in building a transaction model that uses digital certificates. A digital certificate is a type of online passport by which a third party (a Certificate Authority) verifies the holder's identity and credentials for Internet transactions, as well as the privacy and integrity of the data contained in the message.

Called the 11-19 Working Group, the new coalition will work to establish open interface specifications and accelerate the transition for providers, payors and consumers. It plans to identify and promote the most proven Internet standards for the secure transmission of healthcare data and to publish PKI best practices. For more information, visit www.11-19.org.

REGULATIONS

New Outpatient Rules Released; Hospitals Need Software Help

After three years of waiting, the Health Care Financing Administration (HCFA) has released the new Outpatient Prospective Payment System (PPS) and Ambulatory Payment Classifications (APCs) for hospitals. The rules are due to take effect July 1, but some hospitals are seeking postponement to at least January 2001, citing inadequate time to make changes in their information systems and complex software programs to accommodate the new system.

HCFA indicated that the rules would increase payments to hospitals by about 10 percent compared to the proposal of 1998, and that hospitals will receive higher amounts for certain orphan and new drugs, biological and medical devices for two to three years. However, the American Hospital Association says the payments are insufficient, with most hospitals in worse fiscal standing than before passage of the Balanced Budget Act of 1997. The rules are posted at www.hcfa.gov. HEALTH MANAGEMENT TECHNOLOGY reports on the impact of the APCsin this issue(see page 76).

SUPPLY CHAIN

Healthcare Giants Plan Internet Info Exchange

Five of the nation's largest healthcare distributors have agreed to form a separate Internet-based company to serve as an independent, commercially neutral healthcare product information exchange. The five companies--AmeriSource Health Corp., Cardinal Health, Fisher Scientific International, McKesson HBOC, and Owens & Minor--say the initiative would streamline purchasing and distributing of pharmaceuticals, medical-surgical devices, and other laboratory products and services.

Building an exchange may require more than $100 million, but should save significant money for vendor companies as well as for hospitals, physician groups, pharmacies, laboratories, and other healthcare providers. The joint venture should be completed by the end of July with the exchange operating by the end of the year.

Members of the new exchange say they expect to work with group purchasing organizations (GPOs) and healthcare manufacturers, which are developing their own Internet-based exchanges to streamline healthcare procurement. But the likely competition with GPOs and manufacturers may lead to a crowded marketplace for e-procurement transactions. A temporary site for facts about the exchange is www.newhealthexchange.com.

FINANCE

e-Money Lifts Overall Healthcare Investments to Record High

The venture capital flow to e-health enterprises helped overall investments in healthcare service companies reach a record high of $1.6 billion in 1999, surpassing the previous record by nearly 40 percent, according to the PricewaterhouseCoopers Money Tree[TM] Survey. In the fourth quarter alone, 67 healthcare services companies received $492 million in capital, up 65 percent over the fourth quarter of 1998. The number of healthcare services companies that received funding in 1999 actually decreased slightly to 250, but average funding per company increased 42 percent to $6.4 million.

The five largest healthcare deals for the year were all Internet-focused companies. In order, the amounts invested were Neoforma Inc. ($70.5 million), Medsite.com ($55.7 million), HealthInsurance.com ($42 million), Pointshare Corp. ($40 million) and Medibuy ($38 million).

BRIEFLY

OIG Investigates Medicare Billing Software. Medicare billing software programs written for distribution to a large audience pose little risk of producing false or erroneous claims, according to a report by the Office of Inspector General (OIG). Proprietary software appears more likely to pose a risk of misuse or fraudulent use, but the report also points out that humans-not software-are the likely greatest cause of claim errors. To reduce errors, OIG suggests identifying and registering all clearinghouse and third-party billers, taking steps to ensure electronic claims are accepted only from agencies authorized by providers. It also suggests educating providers about their liability for erroneous claims submitted using their provider numbers. To access the OIG report, "Medicare Billing Software and Processes Used to Prepare Claims," visit www.dhhs.gov/progorg/oei/whatsnew.html. Buying Power for Physicians. Medicalbuyer.com, a leading provider of services for purchasing medical supplies over the Internet, and Axolotl Corp., a multimedia e-health communications company serving providers, patients, and consumers, signed a multiyear strategic alliance that will help provide supply purchasing capabilities to Axolotl's base of 52,000 medical professionals in 10,000 physician offices. Axolotl can now offer convenient access and 15 percent to 50 percent discounts on more than 38,000 ready-to-ship, quality healthcare products to the healthcare professionals. Lost Records, Lost Dollars. NDC Health Care, Atlanta, GA, asks, "Do you know where all your records are?" A Massachusetts Superior Court judge awarded $6.5 million to the family of a boy who suffered brain damage from a bacterial infection contracted hours after his 1986 birth at a Boston hospital. The case raised legal eyebrows in 1997 when a judge ruled the hospital was not protected by a $20,000 state cap on malpractice dam ages. That ruling was based in substantial part on the fact that the hospital could not find records of the boy's care, although state law requires records to be kept for 30 years. Three's Company. Microsoft Corp., Healtheon/WebMD and Humana Inc. announced a collaboration to leverage Microsoft Windows[R] for Smart Card technology to authenticate Humana members and enable consumers to securely exchange information through the use of Healtheon/WebMD's MyHealthRecord. Humana will be the first managed care company to implement Microsoft's Windows[R] for Smart Card technology, integrating Humana's members with Healtheon/WebMD's Internet portal. Windows-powered Smart Cards, which are the size of a credit card, have a crypto-capable microprocessor and can perform a number of practical applications, such as secure corporate log-ons for Windows 2000, Web and phone authentications, and medical data storage. Teaming for Wireless Prescription Writing. WirelessMD, Atlanta, GA, and iScribe, Inc., San Mateo, CA, announced an exclusive three-year partnership in which the companies will jointly market an integrated system featuring iScribe's electronic prescription writing and renewal software on WirelessMD's two-way interactive wireless platforms-including but not limited to the Motorola PageWriter[TM] 2000x interactive pager and the Handspring Visor[TM] PDA. The first systems will be functional by June 2000, with expectation for at least 15,000 installed systems by the end of the contract period. Web-based Credentialing. NDC Health Information Services and Caredata.com have announced a licensing and co-branding agreement under which NDC's physician customers can use Caredata.com's automated credentialing application tool, appSTAT[TM] on the NDC Website. Using appSTAT[TM] on NDC Health Information Services' Website, physicians can reduce the amount of time they spend applying to HMOs, PPOs, IPOs or hospitals.