Electronic Services Provider MedUnite Faces Financial Trouble
MedUnite, a coalition of seven health insurers formed in 2000 to take control of electronic services that link them with patients and physicians, faces "financial trouble," the New York Times reports. The insurers expect to "reap enormous savings if they can persuade hundreds of thousands of doctors to use computers and the Internet," rather than telephone and paper, to submit claims for reimbursement and to request approvals for tests and referrals to specialists. However, five of the seven insurers have written down all or most of their investments in MedUnite, the Times reports. In addition, MedUnite has hired financial advisers to "shore up the company." NDCHealth, a health information company that invested in MedUnite, said on Aug. 21 that the "value of MedUnite had declined and that the decline was not temporary." As a result, NDCHealth has written down its investment from $53 million to $12.2 million. However, Maria Shydlo, a spokesperson for Oxford Health Plans, said that the insurer remains committed to MedUnite, although Oxford wrote down its investment to zero. David Cox, president and CEO of MedUnite, described the write-downs as "purely an accounting issue" and said that MedUnite expects to add 85,000 doctors in the next year to the 30,000 doctors who use the company's services. Analysts said that MedUnite's efforts to recruit doctors have "taken longer than expected," the Times reports. At the same time, MedUnite must compete with WebMD, which has 300,000 doctors -- or about 60% of the market share -- who use the company's system to submit claims to insurers. "WebMD had a big head start. Our job is to catch up," Cox said (New York Times, 8/31).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.