• Revenue Cycle Management
  • COVID-19
  • Reimbursement
  • Diabetes Awareness Month
  • Risk Management
  • Patient Retention
  • Staffing
  • Medical Economics® 100th Anniversary
  • Coding and documentation
  • Business of Endocrinology
  • Telehealth
  • Physicians Financial News
  • Cybersecurity
  • Cardiovascular Clinical Consult
  • Locum Tenens, brought to you by LocumLife®
  • Weight Management
  • Business of Women's Health
  • Practice Efficiency
  • Finance and Wealth
  • EHRs
  • Remote Patient Monitoring
  • Sponsored Webinars
  • Medical Technology
  • Billing and collections
  • Acute Pain Management
  • Exclusive Content
  • Value-based Care
  • Business of Pediatrics
  • Concierge Medicine 2.0 by Castle Connolly Private Health Partners
  • Practice Growth
  • Concierge Medicine
  • Business of Cardiology
  • Implementing the Topcon Ocular Telehealth Platform
  • Malpractice
  • Influenza
  • Sexual Health
  • Chronic Conditions
  • Technology
  • Legal and Policy
  • Money
  • Opinion
  • Vaccines
  • Practice Management
  • Patient Relations
  • Careers

Will the Internet finally put an end to paperwork?


Connectivity vendors promise to reduce your office overhead and improve access to clinical data. They can't fully deliver yet, but they're not just spouting hype, either.


Cover Story

Doctors and the Web

Will the Internet finally put an end to paperwork?

Jump to:
Choose article section...Why and how to get connected Who's paying for physicians to play Critical mass is the game's name Hope, or the savior of medical practice?

Connectivity vendors promise to reduce your office overhead and improve access to clinical data. They can't fully deliver yet, but they're not just spouting hype, either.

By Ken Terry
Managed Care Editor

Before a patient visit, Glen W. Ruark of Spokane [WA] Internal Medicine doesn't just consult the patient's chart. He also checks his e-mail for lab results, imaging reports, consultant progress notes, and discharge summaries. "E-mail reports reach me at least a day earlier than the paper reports we used to get," he says. "As soon as a report is finished, I receive it online."

With a couple of mouse clicks, Ruark can pull up the patient's chart from an electronic medical record—and he knows it's up to date. The same day he receives data from labs, imaging centers, and hospitals, a staffer copies it into the patient's computerized chart.

Referrals are just as easy. Ruark e-mails a referral request to a staff member, who completes and submits an online form. (All the payers in the Spokane area have agreed to accept the same referral form.) As soon as the payer authorizes the referral, which usually takes only two or three minutes, a confirmation goes to the practice and the specialist over the Internet. The primary care office receives its authorization number, and the consultant gets all the information needed to bill for the consult.

These and other practice functions have been automated by Pointshare, an information technology company based in Bellevue, WA. In the Northwest, Pointshare claims to deal with plans covering three-quarters of commercial patients. It has also built a strong following among physicians. For instance, about 500 of the 950 physicians in the Spokane area belong to a community network operated by Pointshare.

The electronic "connectivity" model embodied in Ruark's and other practices relies on the Internet and electronic data interchange networks to communicate with payers, hospitals, patients, ancillary providers, and other doctors. It has three parts: administrative, clinical, and patient-to-physician connectivity. The administrative side focuses on relationships with payers, including risk-taking provider organizations. It includes eligibility, benefits, referrals, claims submission, claims status, formularies, and administrative reports. Clinical connectivity encompasses consultant and hospital reports, lab and imaging orders and results, electronic prescriptions, and pharmacy data. The connection to patients might include shared online health records, e-mail consults, and physician Web sites that allow patients to request appointments and prescription refills online.

Most of these components of the wired future are already available or being tested, but that doesn't mean you'll be able to use them all tomorrow. The necessary links are being implemented on a market-by-market basis, so your practice's location will determine how soon you can get connected. For example, Healtheon/WebMD, a major connectivity vendor, is now concentrating on Atlanta, Chicago, Cleveland, Dallas/Fort Worth, the New York metropolitan area, St. Louis, the San Francisco Bay area, and southern Florida.

Although Spokane is far ahead of the rest of the country, it won't be for long. What Glen Ruark and the other five doctors in his group have at their fingertips might sound like science fiction, but it's starting to become available to many other physicians across the US. Within a few years, it may be commonplace.

If connectivity does catch on, it promises to change the way most doctors practice. Not only will it affect the office work flow, but it will make more clinical data available at the point of care. "It's going to enhance the quality of care and raise physician and staff satisfaction," says internist Bruce S. Bernheim of the Advocate Health Care system in Chicago, which has made significant strides in clinical connectivity. "The staff won't have to keep pulling and refiling charts, and we'll be able to spend more time talking to patients."

Why and how to get connected

In theory, connectivity could save megabucks for physicians, hospitals, and payers. Pediatrician Peter M. Kilbridge, a practice director for First Consulting Group in Boston, figures that connectivity could "easily halve the expenses currently devoted to managed care transactions." Michael E. Abel, a colorectal surgeon and senior adviser to the Brown & Toland Medical Group in San Francisco, estimates that the technology could reduce the IPA's and its doctors' administrative costs by up to 30 percent.

Handling managed care transactions online not only reduces paperwork and saves staff time, it can increase a practice's collection rate, note consultants. "If you're able to check referral authorizations and verify eligibility at the point of care, you can avoid a lot of reimbursement headaches," says Kilbridge. "There are a number of ways you can increase revenue and reduce the waste of time."

Nancy Roach, director of member services for the East Boston Neighborhood Health Center, a community clinic staffed by 37 primary care physicians, couldn't agree more. Until last fall, the group's staff had to go through the usual rigmarole to obtain referral authorizations: Four clerks endlessly filled out forms and waited on the phone for 20 minutes to half an hour per referral. Then Neighborhood Health Plan, the group's largest Medicaid HMO, agreed to let the group do referrals online through NaviMedix, a Boston-based connectivity vendor.

Now, to get a referral approved by NHP, staffers simply enter five key pieces of information into a form on a Web browser, and the authorization comes back in 30 seconds. Doing those referrals online is saving each clerk about 45 minutes a day, says Roach—and the plan represents only 10 percent of the clinic's patients. "This is so much easier, and so much better for patients."

Receiving clinical reports over the Internet will also save money "to the extent that it improves the operation of the physician office and wastes less staff time on things like faxing lab reports or getting radiology results," says Kilbridge. But, he adds, the greatest improvements will be in the quality of care and physician morale.

All these benefits aren't free, of course. For an individual physician office, the initial costs of connectivity include the price of one or more PCs with Web browsers. A machine that costs $800 to $1,500 at retail stores should do the job. Several connectivity vendors, including Healtheon/WebMD, Pointshare, and TriZetto, have arranged better rates with computer manufacturers.

Some physician offices use dial-up phone connections to access the Internet, but these are relatively slow, and, if you want them on all the time, you must pay for a separate phone line for each user. The best type of always-on connection for medical offices, experts agree, is a digital subscriber line, offered by phone companies and many Internet service providers.* DSL has about five times the data-carrying capacity of a dialup connection, on average, and typically costs $40 to $150 a month.

The average physician office spends about $100 a month for DSL, according to Kirsten Dryden, who manages Healtheon/WebMD's connectivity program at Brown & Toland, a huge San Francisco IPA. Healtheon/WebMD is paying the cost for Brown & Toland members for three years.

You won't need an electronic medical record to take advantage of connectivity, but it would help you enormously in integrating new clinical data streams into your workflow.

Your existing practice management systems won't go out the window, either. But if your system is due for replacement or you've been using an outside billing firm, you might consider another way to perform your administrative functions electronically, at relatively low cost. By contracting with an application service provider, you can replace or upgrade your practice management software without any up-front investment. The ASP, which does your billing and other functions from a server on the Internet, may allow you to connect to payers and other parties online (see: "ASP outsourcing: A stepping-stone to connectivity?").

Who's paying for physicians to play

Once you have the hardware and Internet connection, cost generally becomes minimal. Depending on your location and the vendor you use, health plans might sponsor your monthly subscriptions to connectivity services. Microsoft and DuPont are underwriting the majority of subscriptions to WebMD Practice, the physician connectivity arm of Healtheon/WebMD.

Even if you have to pay something, it might not be a lot: Pointshare, the company that wired Glen Ruark's Spokane practice, charges subscribers only $25 to $35 per doctor per month, and the cost for WebMD Practice is $29.95.

You might expect health plans to sponsor physicians' connectivity subscriptions, given the potential cost benefits for them. But so far, few have done so, partly because others are already in the picture, or because the plans aren't yet ready to back any particular vendor.

Health plans do consider connectivity with providers a key priority, according to a recent report by the First Consulting Group. Insurers such as Humana, Sierra Health Services, and UnitedHealthcare are paying the vendors' transaction fees, not only for electronic claims submission, but also for eligibility, referral, and claims status transactions.

"If a doctor makes an eligibility query to UnitedHealthcare, United pays us for that transaction, because fielding that electronic query costs less than handling a phone call," explains Dennis Streveler, senior strategist for Healtheon/WebMD. "One major payer spends $40 million a year to answer the simple question, 'Where is my claim?' The electronic cost of answering that is appreciably lower."

On the clinical side, hospitals aren't charging physicians to access their information, because they see connectivity as a competitive advantage. But how much will it cost to connect electronically with labs and pharmacies? That may depend on the vendor. Those services are covered under the $30 monthly fee for Healtheon's WebMD Practice, although the service has yet to provide any clinical data to doctors. (Its newly acquired Kinetra subsidiary, however, provides some clinical data, including lab results, to more than 50,000 physicians.)

Another vendor, ProxyMed, levies a hefty monthly sum for online connectivity with payers, pharmacies, and labs. But Jack Guinan, president of, the vendor's Internet subsidiary, says Merck and national lab chains have agreed to sponsor some physicians' pharmacy and lab connections, respectively, through ProxyMed.

Critical mass is the game's name

Even if doctors don't pay a dime for services, the connectivity trend has many obstacles to overcome. For starters, only 37 percent of physicians surf the Web, according to a 1999 AMA study, though that number is surely higher today. Only about 20 percent of ambulatory care offices have Internet access, say experts, and the portion of practices with Internet-capable PCs in their billing departments is much smaller, perhaps as low as 5 percent.

The number of physicians who have some degree of Internet-based connectivity is difficult to estimate. Healtheon states that about 21,500 office personnel are using WebMD Practice for administrative transactions. In addition, the company says, it has converted 20,000 of Kinetra's 50,000 physician subscribers to WebMD Practice for clinical data. Pointshare and TriZetto each claim that a few thousand physicians are using their services. In addition, a growing number of physician groups, IPAs, and integrated delivery systems use intranets or other connectivity methods.

What these numbers mask is the huge connectivity gaps that exist even in the most advanced markets. For example, Brown & Toland has been working with Healtheon/WebMD to link physicians for three years (see "Leading connectivity vendors). Yet at this point, the IPA offers its physician members only administrative connections, and only to itself, not to any of the plans it doesn't contract with.

To make any connectivity solution feasible, physician offices need to be able to reach most of their payers online. Citing a doctor who has to deal with 50 plans, Dennis Streveler of Healtheon/WebMD says, "I will succeed only if I can give that doctor the critical mass of connectivity he needs."

Connectivity vendors are going into some areas with the backing of managed care companies. Healtheon/WebMD and TriZetto, for instance, are partnering with Humana in different markets. NaviMedix is allied with PHS Health Plans, a big regional outfit in the Northeast. Although NaviMedix had only about 500 physicians using its fledgling service as of April, PHS is offering to pay the vendor's subscription fees for 12,000 of its 50,000 physicians, according to Tom Morrison, NaviMedix's vice president of marketing and product development. NaviMedix's challenge will be to persuade the doctors to sign up, even though it has only PHS and a few other small plans aboard right now.

At the national level, several large payers, including Aetna US Healthcare, Cigna, Foundation, Oxford, PacifiCare, and WellPoint, are reportedly forming their own connectivity consortium. Many Blues plans expect to do something similar, according to Bob Darin, managing director of business development for the Blue Cross and Blue Shield Association. But observers are skeptical that any group of payers will be able to win over physicians. What's more likely to happen, they say, is that the big insurers will back a particular connectivity vendor in each market.

Darin agrees. "Payers are looking for a gateway," he says. "There's a need for all-payer connectivity."

The same is true on the clinical side. Physicians want to be able to get all of their hospital, lab, and other data from one source. They also want all of the parties they deal with regularly, including referring and consulting doctors, to be available online.

That's why no matter where vendors start on the spectrum of connectivity, they'll probably end up merging and consolidating into all-around portals. "Health care is dependent on many relationships, so there will be consolidation that will enable companies to connect all the health care players," says Sandy Lutz, a national health industry analyst for PricewaterhouseCoopers, based in Dallas.

It's not clear yet who the winners will be. With strong corporate partners, gobs of cash, and fountains of publicity, Healtheon/WebMD looks like the 800-pound gorilla of connectivity. It recently acquired Envoy, a clearinghouse that routes about half of the electronic claims filed by physicians. But Healtheon/WebMD lost nearly half a billion dollars in the first quarter of 2000, its stock is in the doghouse, and it's a long way from meeting its goal of providing end-to-end connectivity in any market.

Executives at rival firms such as NaviMedix, Pointshare, and TriZetto say they're not afraid to compete with Healtheon/WebMD, because most communities haven't yet reached critical mass. Moreover, except for UnitedHealthcare, which has anointed Healtheon/WebMD as its preferred connectivity partner, the payers don't seem to be striking exclusive deals with any vendors.

"As we see it, the entire US is wide open right now," say Tim Kilgallon, CEO of Pointshare, which has concentrated on specific markets in the Pacific Northwest. "We don't see anyone doing what we've done in Washington and Oregon. So the plate seems quite full, and until we run into Healtheon in local markets, we're not too worried about them."

Among Healtheon/WebMD's other potential competitors, the standout is the company created by the recent merger of MedicaLogic, an EMR producer, with Medscape, a health care information Web site that has a large following among both physicians and consumers.

MedicaLogic/Medscape focuses primarily on doctors' clinical needs. That includes access to the latest peer-reviewed articles, to EMRs, to patients via online health records and physician Web sites, and to hospital and reference labs.

Will the company seek to become an all-around portal for physician transactions? "Our focus is on the clinical front end," replies MedicaLogic/Medscape chairman, internist Mark Leavitt. "We can grow and expand from there. It could become a portal for all those transactions, but only because we've got the tools the doctors use to create the medical record. We start with the chart and drive the transactions outward from there."

Some claims clearinghouses are also expanding into Web-based connectivity, as are practice management and clinical software manufacturers. "The emerging players on the clinical side are HBOC, Cerner, SMS, and the other traditional vendors that wrote the legacy computer programs and have the kind of functionality that the hospitals are looking for," says Suresh Gunesakaran of the GartnerGroup, a technology consulting firm.

Although all of these vendors offer Web-enabled systems, he explains, the real action is in pulling together the disparate information systems that hospitals already own and giving them a Web browser-based front end so that doctors can access the data from anywhere. He believes many hospitals would rather do this with the help of software vendors they already know and feel comfortable with.

Hope, or the savior of medical practice?

As usual, the truth falls somewhere in between the extremes.

On one hand, there's no doubt that connectivity is coming. But it will arrive much slower than any of the companies trumpeting it would like. It will also spread unevenly, becoming established in some regions long before it's much more than a rumor in others. And some types of connectivity will be adopted before others have a chance to germinate.

One laggard, for example, is connectivity with pharmacies, which would allow doctors to prescribe electronically from a handheld computer. That's technologically feasible already, and Palm-type handheld computers are getting cheaper. Yet only a tiny percentage of physicians are prescribing electronically at this point. More details must be worked out on matters such as digital authentication before most pharmacies will accept online scripts. When they do, however, you'll have an electronic record of every prescription, and you'll know whether and when it was filled.

Also waiting in the wings: real-time claims adjudication over the Internet. When that arrives, a health plan will be able to authorize payment of a clean claim within hours of submission, rather than weeks or months. Several Blues plans and other insurers are preparing to pilot real-time claims adjudication later this year.

On the negative side, you should carefully consider the long-term viability of some money-losing vendors; the possibility of medical data being sold to third parties inappropriately; and the security of all data transmitted over the Internet. Vendors claim their encryption and authentication techniques comply with pending federal regulations, which allow a normal flow of patient data among those who have a need to use it. But there are legitimate concerns about who may have access to online medical records within health care organizations, notes dermatologist Theresa E. Mazich, chief medical officer for Healinx, a company that builds secure messaging systems.

Given all this, what should you do now? Peter Kilbridge of First Consulting Group advises physicians "to look around their community and see who's doing what. Find out what clients vendors have, and what kinds of relationships they've formed with the payers in your area."

Jane Metzger, vice president of First Consulting Group, offers one other piece of advice: "Because you can buy a service by subscription and the technology requirements are so low, it's possible to have one connectivity strategy for the next year or two, and then move on to something else. You can ask, 'What's the best thing I can do today to cut administrative overhead?' without worrying about what's ahead three years from now. Because this whole picture could change quickly."

*See "Computer Consult: Tired of waiting for the Web? Get connected fast," May 8, 2000).

ASP outsourcing: A stepping-stone to connectivity?

How would you like to get a brand-new practice management system, without paying up front for it? Application service providers promise you that deal, but you may not want to jump at it just yet. ASPs are not created equal, and not all practices can benefit from their services.

ASPs are companies that "host" computer programs on an Internet server. Their clients lease those programs from the ASPs, accessing them via personal computers with Web browsers. ASPs supply all the other hardware, technical support, staff training, software, and software updates, for a monthly fee.

If you're thinking about upgrading your system and don't want to spend big bucks for a new one, or if your office is not yet computerized, an ASP could be a logical solution. If you select a vendor that's in the connectivity business, you could also be linked to payers and other providers online, as part of your ASP subscription.

The GartnerGroup, a technology consulting firm, estimates that companies using an ASP can reduce information technology costs by 35 to 55 percent over the life of an application. That estimate doesn't consider the unique factors in health care, however, or the differences among physician offices.

"Many physicians are still working on very primitive computers, and they may have reason to go to an ASP," notes internist and health care consultant Jacque Sokolov, who heads the Los Angeles firm of Sokolov, Schwab, Bennett. "But medium and large groups have already spent millions on information technology, so they'd get different benefits from adopting the ASP model."

Scads of health care ASPs exist, most of them start-ups. The more recognizable names include, Alteer, Medpearl, Passport Health Communications, and Perot Systems. Each has different strengths and weaknesses.

Two important questions to ask ASP vendors: How much experience have you had with physician practices, and what types of software have you licensed? Perot, for instance, hosts Medic Computer Systems software; if your staff isn't familiar with that, they'll have a steep learning curve. In contrast, TriZetto offers not only Medic programs, but also Epic, Medical Manager, HBOC, and lesser-known brands.

It's difficult to calculate the cost of running practice management software through an ASP. A key variable is whether you use a brand-name program such as Medical Manager or some type of homegrown or generic software, says Lu Kabir, senior vice president of marketing and business development for TriZetto. "The software cost of Medical Manager will be at least seven times more than the cost for a functional non-name-brand system," Kabir says.

Other determinants of cost include the number of doctors and staff in the group who'll use the program; the length of the contract, which can vary from six months to several years; and whether technical support will be required all the time or just during specified business hours.

One group that has saved money by using TriZetto's ASP services is Physician Practice Partners, a 70-doctor multispecialty group in Springfield, MA. When MedPartners sold the group back to the physicians and a local health care system in August 1999, the practice needed to upgrade its information technology system, which encompassed multiple sites and three types of software. Rather than try to hire scarce, expensive technical help and take the chance that the upgrade would halt practice operations, the group contracted with TriZetto, which is also a connectivity vendor.

"We determined that going with an ASP would be the most effective short-term solution and would allow us to maintain continuity of service," says Doug McKell, chief executive officer of PPP.

Although McKell won't reveal how much PPP pays TriZetto, he says the group saved money on license fees and on the upgrade of its Epic practice management system. PPP also uses TriZetto's data warehouse and claims audit software to compare Blue Cross' adjudication of claims with the global capitation it pays the group. As a result, the group expects to recover 10 to 15 percent of about $3 million in disputed claims from a recent quarter.

TriZetto's connectivity with payers hasn't helped the group much, beyond giving it outdated eligibility information from two major plans. While TriZetto helped PPP establish connectivity with an outside reference lab for orders and results, that data goes over a computer-to-computer link, rather than the Internet. Ditto for PPP's "shared screen" connections with two local hospitals.

With or without an ASP, connectivity will continue to be limited by the willingness and ability of local health care players to share data online with physician offices, notes McKell.


Leading connectivity vendors

Web-based functions
Estimated number of doctors
Cost per doctor per month
Contact information
Lab orders and results, patient summaries, clinical reports, prescriptions, formularies
888-Abaton-1 (
Eligibility, referrals, claims submission, all-provider record of services and referrals
Fees paid by payers, health care systems
Eligibility, referrals, claims submission, lab and radiology orders and results, prescriptions, physician-to-physician messaging
National health care systems only
6,200 users (including staff)
$30 per user
Eligibility, referrals, claims submission, claims status, lab orders and results, formularies, prescriptions
Northeast, Ohio
Not available
Not available
Claims submission, claims status, eligibility
Eligibility, referrals, claims management, lab orders and results, prescription writing, hospital messaging, formularies
10,000 users (including staff)
Not available
Referrals, claims submission, claims status, eligibility, lab and imaging orders and results, hospital reports
20,000 plus 21,500 staff users


Secure physician-to-physician messaging, patient summaries, prescriptions, hospital orders, results
National, health care systems only
Claims submission, claims status, eligibility, referrals, authorizations, formularies
Paid by health plans
NDC Health Information Services
Claims submission, claims status, eligibility, prescriptions
Not available
Per-transaction fees
Passport Health Communications
Eligibility, referrals, claims status
Per-transaction fees, based on volume. Minimum of $50 per month (150 transactions)
Eligibility, referrals, lab and imaging reports, hospital reports,
Claims submission, eligibility, referrals, prescriptions, lab orders and results
Not available
Eligibility, claims status, referrals
Not available
Transaction fees paid by health plans

1Administrative and clinical connectivity functions claimed in the vendor's literature. Excludes patient connectivity and education, and ancillary services such as credentialing, clinical protocols, provider directories, and supply purchasing. "Eligibility" includes benefits information, and "referrals" covers other authorizations as well.

2Doctors actually using administrative and/or clinical connectivity services. Excludes physicians who submit claims through electronic clearinghouses but don't perform transactions over the Internet. Unless otherwise stated, numbers refer to doctors only. is a unit of McKessonHBOC.

4Includes physicians and office personnel, and covers Web-based clinical functions other than lab orders and prescription writing, which cost extra. Also extra: eligibility, referrals, and claims submission.

5Healtheon/Web MD has agreed to purchase CareInsite.

6Depends on size of practice. also charges 25 cents per noncommercial claim (e.g., Medicare).

7Healtheon/WebMD says 20,000 of the 50,000 Kinetra subscribers now use its WebMD Practice. It has 21,500 administrative users in practices.

8HEALTHvision's clients are health care systems, some of which charge physicians for its services.

9Available alone or through, which offers an Internet-based EMR and clinical data management.

10Through an arrangement with a local hospital consortium.

11ProxyMed relied on electronic data interchange networks until November 1999, when it also began to offer a Web-based service. At press time, offered eligibility, lab results, and prescriptions. Most of the 23,000 subscribers submit claims via electronic data interchange; 2,500 prescribe electronically, and a small number are online with labs.

12For eligibility and lab results only. The full service, when available, may cost more than $100 a month.



Ken Terry. Will the Internet finally put an end to paperwork?. Medical Economics 2000;13:152.

Related Videos