Some on-line health sites are facing hard times
The days of reckoning are approaching for many dot-coms, and health care Web sites are not immune.
One high-profile company in trouble is drkoop.com. Shareholders of the site have filed a class-action fraud suit against the company, charging that C. Everett Koop, chairman, and other directors concealed a damaging auditors’ report while they sold their stock for profits.
The lawsuit, filed in federal court in Austin, TX, was brought on behalf of shareholders who bought drkoop stock between Feb. 15 and March 30. The auditors’ report, dated Feb. 15, expressed "substantial doubt" about the company’s viability because of its negative cash flow and mounting debt. The company, however, did not release the letter until March 30, when it filed its annual report with the Securities and Exchange Commission. The disclosure of the auditors’ report sent drkoop’s share price plunging 60%. Subsequent revelations about the company’s financial situation has kept drkoop’s stock in the $1 to $2 range.
A lack of advertising dollars has forced Internet health Web site Mediconsult.com to lay off almost half of its staff and put its consumer medical sites up for sale. The firm laid off 100 workers.
In 1999, Mediconsult acquired Physicians’ On-line, which is supported by corporate sponsorships and also earns revenue through e-commerce transactions. Mediconsult will now concentrate on its services to doctors, their patients, and the pharmaceutical industry. The cutbacks at Mediconsult will save the company $1 million a month while it refocuses its business. n
• The American Health Information Management Association in Chicago will host its 72nd Annual Conference and Exhibit Sept. 23-28 in Chicago. The theme will be "Data Driven/ Knowledge Bound" to demonstrate that to be competitive, health care organizations must successfully convert their data into usable information assets. For information and registration, contact Theresa Reynolds. E-mail: theresa.reynolds@ ahima.org. Telephone: (312) 233-1159.
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