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Healtheon was a dot-com startup company, created in Silicon Valley by James H. Clark and Pavan Nigam. Healtheon's business plan was to streamline communication and paperwork in the United States health care system. They developed software that placed their company between physicians, patients, and health care institutions, eliminating unnecessary paperwork and facilitating networking and communication amongst the three.[1]


In mid-1995, Clark decided his next venture (after Netscape) should tackle the health care industry. Weeks after Netscape's historic IPO, a meeting of venture capitalists (from Kleiner-Perkins and New Enterprise Associates), physicians, and technologists was held at Netscape's offices in Mountain View, California to lay the groundwork for the company. No consensus emerged on the business model. Nevertheless, a group was assigned to write a business plan. Tellingly, the business plan was never written. Nevertheless, a company, called Healthscape, was formed in early 1996. When the domain name could not be acquired for a reasonable price, the name was changed to Healtheon. The early days of Healtheon were marked with strategic disarray. The initial team, consisting almost entirely of software engineers, set about building a scalable, secure, fail-safe platform that would host the company's later products. This was deemed essential, because, at that early point in the Internet boom, the idea of conducting business online was widely regarded as insecure, constrained, and failure-prone. The question of what healthcare services to build remained unsettled. An extensive collection of medical content was initially envisioned, but when no revenue opportunities could be identified, this was all but abandoned. Ultimately, the company tackled the administrative burdens faced by health plans. Healtheon attempted an initial IPO in July, 1998. This share offering was canceled after a skeptical article appeared in the Wall Street Journal. The company refiled and went public in February 1999. Healtheon's IPO consisted of 5 million shares priced at $8 each. With initial demand for over 40 million shares, Healtheon's price rose over 400% on the first day of trading; it was one of the most successful IPOs to date. The stock price peaked at more than $120 per share later that year, when a merger with Atlanta-based, Microsoft-backed WebMD was announced. The merged company was named Healtheon/WebMD, although Healtheon was the surviving corporate entity. Healtheon later changed its name to WebMD.[2][3][1]


  1. ^ a b Michael Lewis (2000). The New New Thing. New York: W. W. Norton. ISBN 0-393-04813-6. 
  2. ^ Powell, Adam C.; Goldsmith, Jeff C. (July 26, 2012). "The healthcare information technology sector". In Burns, Lawton R. The Business of Healthcare Innovation. Cambridge University Press. p. 517. ISBN 9781107024977. 
  3. ^ Holt, Matthew. "Mike Long: How the Healtheon/WebMD Venture Inspired Others". Health 2.0 News. Retrieved January 15, 2014. 

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