The pending four-year alliance would encompass a $50 million cash commitment by Medtronic to Healtheon/WebMD for extensive big-scale initiatives reaching both consumers and physicians, including developing an Internet platform for disseminating information on proven medical products and treatments, and creating dedicated on line health information channels for disease-focused communities. In addition, Medtronic intends to invest an additional $50 million into WebMD Europe, a company to be formed by the previously announced global joint venture between News Corporation and Healtheon/WebMD.
Medtronic would be WebMD's worldwide exclusive medical technology on line and off line media sponsor and advertising partner in the following disease categories in which Medtronic provides a wide range of diagnostic and therapeutic devices and services: cardiovascular disease, peripheral vascular disease, neurological and neuro-surgical diseases and disorders, chronic pain, ear, nose and throat diseases and disorders, spinal diseases and disorders, and urologic diseases and disorders. The companies will collaborate in further developing the information through their respective Web sites.
Following a recent announcement of Medtronic's partnerships with Microsoft and IBM to develop Patient Management Systems, this novel agreement with Healtheon/WebMD further advances the implementation of the company's Internet strategy. Medtronic's earlier alliances with Microsoft, IBM and now Healtheon/WebMD accelerate the convergence of medical technologies with information technologies, which is rapidly and significantly enlarging the informed involvement of the patient in the medical decision-making process. WebMD.com will be the e-health portal through which Medtronic's Patient Management System can be accessed.
High quality, credible Internet-based information portals, such as WebMD, will educate the patients about their conditions, enable them to contrast and compare treatment options, and identify the physicians who can meet their needs. At the same time, Medtronic will link patients and their physicians to secure diagnostic and therapeutic delivery systems through a secure Patient Management System portal on the WebMD Web site. "Medtronic's teaming with Healtheon/WebMD represents a win-win for time-pressured physicians and information-hungry patients", stated Glen Nelson, MD, Medtronic's vice chairman. "It will dramatically improve the quality of care and the patient-physician relationship at lower cost to the health care system."
In the first quarter of 2000, Healtheon/WebMD and Medtronic will create a comprehensive, trusted information source for the cardiovascular as well as neurological diseases, and chronic pain and urologic conditions, for both consumers and physicians. In a variety of chronic disease categories where Medtronic's medical devices offer established and emerging new therapies, WebMD and Medtronic will generate professional and consumer-oriented activities, such as on-line product-specific information modules, educational programmes for patients, prospective patients and physicians, dedicated resource channels for medical devices and market research.
The agreement enables Medtronic to build a more interactive, consumer-friendly Web site using the expertise of Healtheon/WebMD. The WebMD physician portal will include Medtronic-sponsored continuing medical education courses, a medical device resource channel, market research, patient education materials, and on line events. The WebMD consumer portal will feature Medtronic's co-branded content focused on specific diseases, interactive communities, live chat events, consumer promotions and health-o-meter diagnostic tools.
The second contract between Healtheon/WebMD and medibuy.com provides for co-branded informational and educational pages for the benefit of health care professionals that will appear on both Healtheon/WebMD's professional portal, WebMD Practice, and medibuy.com's site. Under the terms of this three-year agreement, Healtheon/WebMD has agreed to promote and market the medibuy.com service to its members. Physicians accessing the WebMD site will be able to purchase health care supplies and equipment via tightly integrated services which are programmed and delivered by medibuy.com.
Total payments to Healtheon/WebMD for placement on its site will be $45.5 million over three years, with payment of $10.74 million in 2000. Separately and additionally, Healtheon/WebMD will receive a share of the transaction fees generated through the co-branded site. Medibuy.com will create custom content and tailor its suite of procurement solutions: e-Catalog, e-Auction, e-Specials and e-RFP, specifically for the physician marketplace and also offer these services through the co-branded site, allowing the physicians and their staff to simplify their buying process.
In addition, medibuy.com will equally implement a comprehensive marketing programme to promote Healtheon/WebMD and WebMD Practice as part of the medibuy.com solution to its hospital customer base, thus leveraging the strength of medibuy.com's sales and market development staff. Under the agreement, medibuy.com will receive marketing development fees. The two partners will create and develop exclusive joint marketing and promotional programmes which will leverage Healtheon/WebMD's extensive on line and off line branding, marketing and media assets to market the new e-health marketplace to the health care industry.