But the survivors are likely to be paired with other institutions, such as employers, insurers, hospitals or clinics, that will pay to supply the information to consumers. Most of the early consumer health-care sites expected to subsist on advertising revenues, mostly from drug companies. And in a race to get their content out first, they competed to pay high fees for partnerships with America Online Inc. and other distributors, which hurt profitability. But there was not enough advertising money to support all the sites that sprang up, and by this summer, the sector was bleeding red ink. WebMD, the leading consumer health site, which is part of a larger company that specializes in health-care transactions online.
Doctors have a choice of joining as paid subscribers or through a service supported by advertisers.
InteliHealth, based in Blue Bell, Pa., a subsidiary of Aetna U.S. Healthcare, the nation's largest operator of health maintenance organizations. Much of the industry consolidation has been driven by WebMD, which has acquired 10 companies in 10 months, including Medical Manager, CareInsite and OnHealth Network in September. In the short run, Merrill Lynch is neutral on the company, but long term it sees WebMD as a dominant player. When it started in 1996, InteliHealth was using the advertising model, too, according to President Sal Uglietta. But since then, the company, which now has 80 employees, has built a diverse revenue stream.