Second Opinion

Similarly, WebMD is taking a more gradual approach to Webifying doctors' offices. In 1998 and 1999, the Elmwood Park, New Jersey-based company hoped to sweep aside the standard ways that doctors handle claims, referrals, and other paperwork, in favor of a radically new, Web-based system. It was a bold idea, but many doctors were skeptical about switching to such a new, unproven system. Since then, WebMD has acquired three of the leading companies that process medical transactions using electronic data interchange, a more conventional system that relies on non-Web computer links. That lets WebMD introduce Web alternatives in a low-key way -- and by building on existing business relationships.

"People can handle only one substantial change at a time," says Alan Gellman, 38, vice president of e-business at Blue Shield of California. "If you want to change how someone functions as a doctor, that's going to take a generation. That isn't a one-year project."

Gellman is speaking from experience. During the past year, he has spearheaded an ambitious project to overhaul mylifepath, Blue Shield of California's main Web site. A new version of the site, which the insurer is launching this spring, provides not just an array of handy nuggets on asthma, pregnancy, and other conditions, but also a comprehensive set of specialist directories, information on the fine points of covered benefits, and links to pharmacies and other relevant health-care providers.

"It was a huge undertaking," Gellman says. "Members may come to the site with what they think is just one simple question. But what they really want is the ability to get answers from many different parts of the health-care system. To make that possible, we had to integrate information from 18 or 19 different vendors."

A year or two ago, plenty of small startups might have tried something just as ambitious. Most would have failed -- not because they couldn't write good software or because their mission was foolish, but because they lacked the clout needed to make disparate teams work together. Only an organization as big as Blue Shield of California, with its 2.3 million members, can compel such cooperation, and even then, the task is far from easy.

For that reason, many Internet health startups are tackling smaller, more clearly defined projects. One example is eHealthEngines, which at one time aspired to put all kinds of clinical data on secure Web sites. That's still a long-term goal, says Mark Gillett, 26, president of the Cambridge, Massachusetts-based company. But for now, his startup's top priority is to help outpatient radiology centers and surgical facilities transmit digital images (along with associated billing data) via the Web, rather than via courier services.

By confining its activities to such a small arena, eHealthEngines is able to focus on an area where computer use is already extremely high and where the opportunity for instant savings is readily apparent. As a result, it's much easier for Gillett to line up customers -- and to fulfill the promises that he makes to them -- than it would be if he were trying to Webify everything from pharmacies to surgical suites.

There's a lesson here that stretches well beyond health care. In many complex industries, you're asking for trouble if you stage a flat-out assault on an enterprise's fundamental way of doing business. The best points of entry for Web-based innovation are likely to lie at the edges of an industry, in tasks that involve relatively simple handoffs among small sets of people. Only after those initiatives pay off -- that is, only after lots of people on the front lines see the Internet as a boon to their work -- does it make sense to pursue bigger dreams.

These days, of course, necessity is often the mother of prudent strategy. In its venture-capital round last year, for example, eHealthEngines raised just $5.5 million. That's enough to bankroll the radiology-center project and a few other initiatives, but not much else. "If we had raised $50 million," says Gillett, "we'd probably have stars in our eyes too."

George Anders (ganders@fastcompany.com), a Fast Company senior editor, is based in Silicon Valley.