The new company intends to lighten the paperwork load for doctors by moving tasks to the computer. According to Pfizer's statement, the service should appeal especially to those practicing in smaller groups, which represent 70 percent of office-based doctors.

Smooth Operation

The new company's goal is no less than to catapult doctors into cyberspace. Microsoft will commit its .NET Enterprise Service Platform, together with Windows 2000 and wireless devices, to help streamline workflow. IBM's role will be to sell the hardware involved, host data and applications and offer help desk services, according to Russell J. Ricci, M.D., general manager of IBM Global Healthcare.

Perhaps the biggest winner in the deal is Pfizer, which, like most pharmaceutical companies, strives to integrate itself with its best customers -- doctors -- as closely as possible, according to analysts. In order to maintain credibility with other clients, however, Pfizer said it would not use the new venture to promote other products.

The new company, as yet unnamed and without a chief executive officer, plans to launch products and services by year-end with its own dedicated marketing, support and sales teams. Press reports indicate that the new company may go public.

Shares of all three companies rose on the announcement of the alliance.

Unhealthy Market

Meanwhile, shares of WebMD (Nasdaq: HLTH), a company formed to accomplish goals such as moving medical records online, closed off 7.69 percent Thursday, at US$4.88. The company had recently gained due to strong quarterly results. However, WebMD lost over $230 million last year.

Another company, MedicaLogic/Medscape, Inc., has struggled in the field as well.

Pfizer officials admitted that penetration into doctors' offices was not high for the services they intend to offer. They were optimistic, however, that involvement by heavy-hitters such as IBM and Microsoft could help the new venture succeed where others had failed.

The problems facing the new company are manifold. Small medical offices generally lack the wherewithal for key technical personnel, and must also overcome the burdens of conflicting legacy systems and privacy concerns about transmitting patient data over the Internet.

"It's still a very challenging task," Manoj Kenkare, eHealth group manager at Frost & Sullivan, told NewsFactor Network. "They will have to go to doctors on a grassroots basis" to operate the service smoothly. (continued...)

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