Business

AOL co-founder fires first shots in his medical Revolution

Steve Case injects star power and money into the consumer-driven health care market by acquiring a mix of companies he thinks can effect change.

By Tyler Chin — Posted Oct. 24, 2005

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When it comes to the health care business, Steve Case says he wants a revolution. He says he's got a real solution. Well, you know -- we'd all love to see the plan.

America Online co-founder Case, who said he founded Revolution with $500 million of his own money, on Oct. 5 revealed his initial plan for funding companies he believes will help change the health care system.

Revolution acquired control of six companies that offer online health content and insurance coverage products to consumers or employers -- myDNA Media and 1-800-Schedule, both in Austin, Texas; Simo Software, Oakland, Calif.; Wondir, Bethesda, Md.; Extend Benefits Group LLC, Salt Lake City; and ConnectYourCare, Timonium, Md.

Revolution also got a minority stake in and the right to acquire control of InterFit Health, Houston, which owns RediClinic. That company runs medical clinics staffed by nurse practitioners at employer sites, drug chains and some retail stores.

Ron Klain, executive vice president of Revolution LLC, the Washington-based parent company of the group, declined to disclose the acquisition costs.

Some industry observers said Revolution will accelerate the growth of the consumer-driven health care market. Case has assembled an A-list board of directors including former U.S. Secretary of State Colin Powell, and former Fortune 500 CEOs Carly Fiorina (Hewlett-Packard), Steve Wiggins (Oxford Health Plans) and Jim Barksdale (Netscape).

But whether Revolution can succeed as a company "will depend on how well they integrate services and on consumers' appetite for paying for some of these services," said Katy Henrickson, a health care senior analyst at Forrester Research, a consultancy in Cambridge, Mass.

Still, Revolution faces an uphill challenge because, except for in-store medical clinics, major insurers can roll out whatever service it offers quickly or even ahead of it because they are better capitalized, said William Boyles, publisher of the D.C.-based Consumer Driven Market Report.

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