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Revolution Health: Heralding the Demise of "Health 2.0"?

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Anticipated disposal of Steve Case's Revolution Health points to some fundamental problems with the "Health 2.0 Movement"

While I have been consistent in criticizing the excessive enthusiasm and hype around so-called "Health 2.0" movement, I always tried to steer clear of pointing finger at specific companies and individuals.

Why? Because I believe innovators should be encouraged and given benefit of the doubt. Even if their ideas make absolutely no sense. Once in a while even a crazy idea works. On the flip side, once enough hard data is available, ignoring reality can be foolish. Just look at the latest Wall Street meltdown.

Thus, Revolution Health shows what is wrong with "Health 2.0"

First, in case you have not followed Revolution Health closely, let me offer a refresher. Back in 2005, Steve Case committed his vast AOL fame and fortune to make a bid to "change healthcare". He joined a long list of tech industry insiders who tried before him. Media coverage has been slow to develop, but around 2006-2007, the expectations around Revolution rose steadily. A whole lot of people jumped on the bandwagon, thinking that "Web 2.0" promises an easy path to riches in healthcare. They are easy to spot by excessive use of "Health 2.0" term.

Given around $250M invested in the company, Revolution Heath Group (RHG) had plenty of time and money to experiment with many ideas. In fact, they tried almost every Internet health idea under the sun. Many of those came by way of acquisitions, while many were developed internally by copying competitors. While it is hard to call this approach focused, at least they had a chance to try and copy almost everything that had promise, giving them the first dibs at success.

Three years later the results are in and they are not pretty

I will spare you the painstaking history and just point to Washington Post report that Revolution Health is in the process of being sold. This is a far cry from original dreams of healthcare transformation and domination, espoused by Steve Case. To put it crassly, you can afford to dream only as long as your cash flow is positive. Despite impressive starting war chest and exhaustive experimentation, most revenue streams failed to materialize, aside from plain-vanilla advertising.

To understand why the numbers do not add up, look at my earlier post estimating ad earnings of a MacRumors blogger with more traffic than RHG. Suffice to say, if all RHG does is sell advertising they do not have much a business to support hundreds of employees and even Steve's deep pockets would not keep it afloat for long. Now how does this compare with a "typical Health 2.0 company"?

Promises of "changing the world" without cash flow to back it up

Take a look at companies that talk of being "2.0" and consider if they are making any money or just waving their hands. In many cases you will not even get a clear answer of what will pay their bills once funding runs out. Even when a business model is identified, it is rare to see the numbers add up to be material, support the cost structure and provide growth to match "change the world" promise.

In fact, we do have plenty of data to know that change in the healthcare system will be anything but revolutionary. Health consumers are hesitant to engage online, aside from anonymous searching. Achieving scale in online health is anything but easy and even if you can do this by spending lots of money (like RHG) you find that your investment may be returning pennies on a dollar.

New business models that had achieved any degree of success are hard to find. In fact most of things that work tend to be minor variations of what has been around for a long time and the limitations are well known. Display and search advertising. CME sponsorships. eVisits. Enterprise software, perhaps delivered as a service (SaaS). Even Sermo information broker model is a clone of Gershon-Lehman.

What is Health 2.0 if true success is so mundane and incremental?

Let me suggest a helpful definition:

Health 2.0 term represents irrational exuberance around unproven healthcare ideas that do not have a sustainable business model. The intended use of the term is to confuse and distract the listener from questioning viability of the concept. The term should not be used for proven projects to avoid the negative association.

Sounds a lot like what "dot-com" used to mean? Everything comes full circle.

Many original enthusiasts are starting to reach similar conclusions

In fact, RHG troubles are so visible that many people excited by Health 2.0 promise are starting to ask the same questions and discount the hype. This a very positive sign for the future of Internet health. Unrealistic expectations and outrageous claims undermine the marketplace. On the other hand, lack of crazy Health 2.0 venture exits means you cannot get too far on the hype alone. You have to prove you are solving a real problem and have metrics to back it up.

So here is my shout-out to a few bloggers who are thinking clearly:

Curiously enough, most of Steve Case's problems were predicted by Joe Paduda, almost 3 years ago. You should read his full piece on Case's strategy for Revolution Health and consider a few choice quotes:

Again, I admire his vision, but the naivete can be breathtaking. For example, Case is quoted as saying "The healthcare system will be fundamentally different. It has to be. It's not working."


Steve, it has not been working for decades, and just because it is so obviously broken does not mean it will get fixed any time soon. See Africa's economies, the Middle East, the World Health Organizations' efforts on AIDS, polio, and river blindness, drug addiction - all very big problems that are very difficult to solve that have blunted the lances of all who have attempted to date.


It's a great line. But what does it mean? Case won't get into details, including financials. But Revolution Health's plan reveals that Case is pursuing the same strategy as his old company: He's going to launch a web portal next year, just as AOL did this year."

What does this mean for you?

With apologies, here's the old joke -" how do you make a million in health care? Start a consumer-directed/web portal plan with $250 million"

The most ironic twist is that Joe's assessment back then was seconded by Matthew Holt, who later ended up starting a conference to promote the wonders of Health 2.0. Perhaps the most profitable Health 2.0 business model is holding a conference to sell the dream to people who for whatever reason cannot do their own research. But over time the marketplace catches up and separates wheat from the chaff. Changing media coverage shows that this is already happening.

The sooner people ditch the hype and focus on proving their claims with metrics, the faster we will realize the true promise of the eHealth

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from HealthCareVox on Fri, 09/19/2008 - 2:34pm

Late last week, the Washington Post announced that Steve Case’s Revolution Health Network initiated discussions to merge with EveryDay Health.  According to the Post, “the new company would be one of the world’s most visited onli...

Comments (9)

Submitted by John Lynn (not verified) on Tue, 09/16/2008 - 8:44am.

I agree with most of your points, because they are all well proven already in the technology startup world.  Health 2.0 is just one sliver of that world.  Of course, this doesn't mean that people shouldn't dream and try to make millions off of healthcare.  The fact that someone with $250 million has failed to make it big doesn't mean anything other than Health 2.0 is no different than other startups.  I think someone will hit it big in the Health 2.0 space.  It's just a matter of when and who. 

Plus, while metrics and proven models are nice, they aren't probably what will make a great Health 2.0 company.  Google when it started didn't have metrics or a proven model and they seem to be doing alright.  My guess is that a company in the Health 2.0 space will get lucky like Google too and happen upon a good business model that wasn't seen before they tried.

Submitted by hippocrates on Tue, 09/16/2008 - 11:50am.


Thanks for commenting. Indeed, most of these points are not new. Unfortunately they seem to be forgotten by a lot of people in healthcare!

To answer your specific points, let me re-iterate myself:

1) Experimentation in new fields should be encouraged

2) Once there is enough data to see how well these experiments have gone it is a good idea to pause and think what the results mean

3) Failure of a $250M venture that made so many well-hedged bets on the sector should be a wake-up call to everyone

There is always a chance for a "Google" in every new space. But every potential "Google" needs to have credible numbers and assumptions. Original Google had that (target # of searches by $$$ per search), even though many people back in 90-ies did not know how to interpret the data.

However, with "Health 2.0" the insight so far is that the only workable models are evolutionary and the numbers do not add up to be sustainable. Unless you embrace incrementalism instead of hype.

For every Google there are hundreds of and Webvans!

Submitted by Matthew Holt (not verified) on Wed, 09/17/2008 - 9:01am.

Normally I leave Dmitriy's bizarre wofflings alone, but because he's directly "pointed the finger at me" it's time to respond.

While there may be a demise in Steve Case's investment, Dmitry proves yet again that his professional jealousy - as a software geek with no background in understanding the healthc are system, and the creator of a failed conference about blogging --gets in the way of his limited analytical skills of what he claims I've been saying about Health 2.0.

 Had he paid attention during the Health 2.0 Conference in 2007 which he attended he would have noticed that the audience was asked what would be the future of the search, social networking, & consumer tools that made up Health 2.0. The response was that 70% felt that these tools would be adopted by mainstream health care companies, rather than become a standalone industry.

Had he paid attention at the end of the dotcom boom and bust he would have noticed that with the exception of Amazon, E-Bay,Yahoo,  and a few other media business, by far the biggest adoption of the Internet tools was by mainstream companies which spent the next five years changing how they ran their businesses and connected with their customers. While the & Webvan bust bust was going on, the proportion of Americans (and everyone else) going online and using Web tools for information and commerce continued to grow exponentially Has Dmitriy bought an airline ticket or checked his bank account in the last ten years?

Had Dmitriy been paying attention now he'd have noticed that the proportion of online Americans (and others) using the Internet for social media/Web 2.0/Health 2.0 purposes has gone from virtually none 3 years ago to over 60% today.

If, as seems unlikely, Dmitriy pays attention in the future, he'll see a similar adoption of tools that make up Health 2.0 by all players in health care, including those which have no interest in profit like the VA, and the UK national health service, as well as by major American for -proft health plans and providers. There may or may not be some remaining independent media companies that emerged during this latest wave, but if Dmitriy was paying attention this week he's have noticed ComScore's report that visits to health care properties are up over 20%.

As I have been saying all along, Health 2.0 is about a participatory change in how consumers/patients/citizens relate to each other, and to the health care system. It's not just about anyone including Steve Jobs trying to get rich without doing anything worthwhile.  Because Dmitriy's conference wasn't a success doesn't mean that blogging is not important. But  because  the Health 2.0 Conference has been a success does not mean it has been hyping the creation of a standalone industry in which every new venture would be successful.

But then again this analysis would require that Dmitriy pay attention to large underlying phenomenon, not just get overexcited about Steve Case losing a few bucks .



Submitted by hippocrates on Wed, 09/17/2008 - 3:17pm.

Thank you for the ad hominem argument, Matthew.

While the purpose of my original post was not to point at you specifically, I thought the reference to your assessment of Steve Case three years ago and your subsequent flip-flops on the role of technology in healthcare were very relevant. I apologize if I hit your nerve.

Way easier to dismiss my argument as "bizarre wofflings", instead of looking at the facts and metrics to figure out what really works and what does not for these new ventures. What is really new and what is not. You do not have much interest in looking at how things really are, instead of how you want them to be? I have not seen much interest on your part to ask any hard questions. Your coverage of Health 2.0 always reminded me of Lake Wobegon - every project is above average.

Never did I say that new technologies in online health are not going to have huge impact. Or that there will be no new Amazons, eBays and Yahoos. Nor does it mean that new technologies will not be adopted by mainstream healthcare organizations, as it is happening at a rapid clip. There is plenty of evidence that the major changes are here to stay - as I have said time and again.

What I have said consistently is that there is a lot "irrational exuberance" around this innovation and by some "coincidence" the least substantiated claims tend to come bundled with the "Health 2.0" term. I understand not everyone remembers "1.0" business cycle, but back then the similar buzzword was "dotcom". The term became symbol of excesses and created a lot of confusion, distraction and ultimately financial losses for most marketplace participants. While the underlying technology trends were as solid then as they are now, I think there is the same pattern of setting expectations a bit too high - bound to disappoint.

Since everyone gets to put forward their own definition of Health 2.0, I did that too in my post. My point is that true Internet health innovations, do not need a "buzzword crutch" and should be able to prove themselves on their own. There are quite a few companies, including startups, that are doing just that. Lumping them in the same pile with those that are relying on hype is a disservice to true innovators.

Funny that you question my background as a software geek as irrelevant when we are talking about changes in healthcare, brought about by technology. What you should ask yourself is if you need to get some basic education to understand the metrics involved in creating Internet driven businesses. While there are many interesting and unique approaches specific to healthcare, everything still comes down to how many people are engaging with your service, how often they do it and how well are you monetizing these interactions to return on your investment. Not much of this sort of analysis has appeared in your productions. The exception is your frequent referencing of highly summarized data (e.g. ComScore's +20%) which often masks the truly important trends that happen on micro level. What is the top pet peeve of venture capitalists? Entrepreneurs who say "the market is $10 billion and we only need to get 1%". Most of such "analysis" is completely out of touch with real specifics of what it takes to succeed. The only metrics that count are built bottom-up. Where are they for "Health 2.0"?

Finally, I am kind of getting a kick out of your references to my "failed conference" and "professional jealousy". Indeed, my conference has not drawn as large crowds as yours, but they had a lot of differences, including different subject matter, different timing and different standards. While I pulled the plug on the Healthcare Blogging Summits, I also passed on several new opportunities to do more conferences. Why? Because conference production is not a line of business where technology and Internet are central. Producing conferences is very different from actually participating in the marketplace. So I made the decision where to focus. Most of my new projects, by the way are not for public announcement.

As to the final tally of who is right and who is wrong, let's wait for the marketplace to sort everything out. Revolution Health outcome is just one of the datapoints. Surely enough we will have more soon - The Good, The Bad and The Ugly. The wheat and the chaff will get separated as people start asking questions.

And if you are a 3rd party without a horse in the race, consider that early warnings can save a lot of pain later. Just ask Lehman shareholders.

Submitted by Anonymous (not verified) on Sun, 09/21/2008 - 8:55am.

Rev Health is NOT a good example of why the entire Health 2.0 movement is a farse.  There are several reasons why Rev Health failed that you did not mention.  You gave too much credit to the company stating they acquired companies, and copied all the good stuff out there, and then had $250m to burn and they still couldn't make it... i.e. they gave it a better try than most companies could yet couldn't make it fly and thus Health 2.0 is over-rated. 

Here are the facts of the matter:

1. Rev Health was started by a guy who had grand vision but no clarity on how to execute on that vision.  A guy who's hubris blinded him from the reality that he imght benefit from listening to people with experience in the healthcare industry who know how to change it.  If you know anything about the healthcare industry you know this:  1.) be patient, persistent, and perservant.  2.) spend you money wisely in order to sustain for the long-haul because it's going to be a long-term play. 3.)  Identify the insiders who want to be change agents but need the political, financial, and cultural backing to make it happen.     Rev Health with SC at the helm ignored each of these backbone requirements of a successful play.

2. The original CEO....Steve hired a marketing guy with amazing intellect and charisma (he could sell ice to eskimos), even vision, but no ability to stop himself from changing his mind/direction of the company, and no experience whatsoever in the healthcare industry space.   oops..... there goes the treasure chest of $$ and employee morale.

3. The Board of Directors-- imagine our President creating a Foreign Relations Committee comprised of people with no experience in that area (sort of like choosig Palin as VP-- sorry couldn't help myself).   Rev Health BOD was comprised of powerful business-people with absolutely no experience in the health industry space excluding Steve Wiggins of Oxford health who apparently sold his stock and made millions just before the company went belly up.  Now that's integrity for you.

4.  Portal-- Despite the heavy financial investment in products, services, and personnel, the portal was nothing new and many felt a poor user experience.  Too much time spent re-doing products in response to the flippant decision making from the original CEO.  As a result you had a product with poor navigation, unoriginal content, basic tools, rudimentary phr, and a community that originated from acquired websites who were fleeing the 'new destination called Rev Health' in the tens of thousands.   Not very exciting and certainly not 'revolutionary'.  

 4.  Burn rate-- The first CEO, John Pleasants went through the vast majority of cash before they even launched their website....making deals with the likes of Mayo and others, buying large capacity servers that never reached above single digit capacity etc etc. 

 5.  Senior Management-- take a look at the original and subsequent Senior Mngment team.....only the Chief Privacy Officer had experience in healthcare and was worth her salt.  The others....Jay Silverstein....great vision/intellect but not an operator and couldn't manage his team, and a former Oxford guy who divested like Wiggins just before the collapse of Oxford.   Jef f Gruen a 'once upon a time' doctor who became an insurance executive and wouldn't hesitate to his mother to a terroist for an extra penny.   These tribal fractions engaged in turf battles such that the infighting left the middle-management unable to execute.... burn baby burn.  

6. Bus Plan-- did you notice that I haven't mentioned their well thought out bus plan.  Well....apparently there was never a business plan created...yikes!

7. Rev Health phase 2-- if you followed the newspaper clippings you'd notice that the CEO was replaced with Steve as acting CEO and his right hand man Ron Klain (attorney) as the day to day guy.  Klain was afraid of his own shadow so nothing novel or 'revolutionary' could ever be considered for fear they might upset the medical establishment-- as if they even noticed Rev Health was in existence. 

They finally replaced the senior team with reasonable folks with some ability to engage in a 'turn around' which was desparately needed.  Unfortunately,  by the time that phase 2 turnaround folks stepped in, the treasure chest had been spent, morale was in the toilet, and there was no vision or funds to create the 'new content play' or 'novel B2B play' .  

 Bottom line-- indeed there is incredible hype about the 'power of health 2.0' and not a single example of a successful business model in the marketplace YET but whatever you do, don't look to Rev Health as an example of a group of guys/gals that had all the right ingredients and still couldn' t make it work.   Look at Rev Health as an example of what NOT to do.  It'll be a GREAT business school case study indeed.

p.s. you got to feel abit sorry for Steve..afterall most of the cash invested was out of his bank account but then again....think of the hundreds of folks that believed Steve's repeated rhetoric that he was here for the long-term play and travelled the world to join him in his long-term and revolutionary play.   Once they arrived, they begged and pleaded with him to slow down the burn rate (early in the game when the treasure chest was still full) but his hubris blinded him from the hard reality..... 

Submitted by hippocrates on Mon, 09/22/2008 - 1:43am.


I agree with your points re: Rev Health. But I still think this venture is an exaggerated example of mistakes typical to Health 2.0 companies. Like excesses of Webvan and eToys magnified what was wrong with dotcoms.


1) Founders / CEO: How many Health 2.0 companies are started and run by people who are equally well-versed in healthcare realities and Internet industry? Very, very few.

2) Board & Management: Yup, nobody else in the industry can boast such high ego to value ratio. But typical VC-dominated boards & execs can drive companies into the ground just as well.

3) Product: Your real point is that the product was not very original. Guess what, the same thing applies to a lot of Health 2.0 companies. My point in the post is that the only successes were very incremental.

4) Burn Rate: Yup, no one can come close to Rev Health profligacy, startups just do not have that much money to burn. But I would argue spending a penny before you have a solid plan is wasteful.

5) Business Plan: Ditto. How many new business models that work can we see in this whole industry? Not many and the ones that are incremental do not well on metrics, like you know turning profit.

6) Phase II: What can I say? Collapse of every company is unique.  

The point of my post was to suggest that people should be smart to recognize the same basic problems with product, people, business model and expectations problems in the rest of this industry...

P.S.Yes, I do feel sorry for Steve. He joins a long list of tech industry folk who tried and failed in healthcare. Now consider how "hundreds of people who believed Steve" are different from those buying into the hype of Health 2.0 promoters, promising instant revolutions.

Submitted by rosewhite666 on Wed, 01/26/2011 - 11:51pm.

I'm hopeful about 2011, but to succeed we will need to build and support powerful grassroots health movements.


Submitted by Ival (not verified) on Tue, 01/31/2012 - 11:56am.

Wham bam thank you, ma'am, my questions are asnwreed!

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