Watching as the Internet spawns thousands of health care sites seemingly overnight, Steve McGeady can only sigh. "There's too much money chasing too few good ideas," says the vice president and director of Intel's Internet Health Initiative, a program to help medical practitioners and consumers find and convey health care information online.

"Right now, the market is funding anything in this space," confirms Anthony Vendetti, a health care information technology analyst at Gruntal & Co. And indeed, the numbers are staggering. With second-quarter revenue of just over $1 million and losses of about $17.7 million, DrKoop.com (Nasdaq: KOOP) claimed a market cap of more than $566 million in August. That seems pretty high until you stop to consider that, in July, investor giddiness over Internet health plays pushed the company's market cap over $1 billion. What's more, even lesser-known players are raking in the dough. "I'm getting multiple calls weekly from investors," says Dr. Raj Lakhanpal, CEO of tiny HealthAtoZ.com. "It's gotten expensive to compete in the space, but it's also gotten easy to raise money."

While it's tempting to sneer at this flood of cash, keep in mind that in the United States alone, we spend $1 trillion on health care annually, according to Vendetti. "It's the economy's biggest sector," he says. "The opportunities for winning big here are tremendous."

Continued at: http://www.upside.com/texis/mvm/story?id=37eac1e80

Published in The Ferguson Report, The Online Health Epidemic, September 1999

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