So This is How Revolution (Health) Ends -- No, Not With a Bang

(MoneyWatch)  Although the news still seems to be at the rumor stage, it's beginning to look a lot like Steve Case's much-hyped healthcare revolution -- known, fittingly enough, as Revolution Health -- is running out of steam. And it's not exactly a huge surprise, since Revolution serves as an excellent object lesson in how to waste a ton of money trying to change the healthcare system without really understanding it.

A little over a week ago, the obscure trade publication Workforce Management reported that Revolution had hired Morgan Stanley to raise capital and to explore "strategic alternatives" -- never a good sign for a going concern. Revolution has apparently denied that it's for sale, but doesn't seem to have much else to say -- including any comment on the rumor a week ago that it might merge with the women's ad network Glam -- whispers that turned out to be either untrue or premature.

Even without such talk, Revolution looks like a company in trouble. Its traffic has fallen by almost half since its peak of eight million unique visitors in April, according to Compete.com, it has laid off 110 of its 290 employees over the past year or so and it's changed strategy a number of times -- most recently abandoning its efforts to market health information directly to employers via Web portals and refocusing as a consumer health-information site, making it one of dozens now available.

From the beginning, Revolution Health was little more than a slogan in search of a strategy. Case has long said that the company aimed to transform healthcare by emphasizing the role of the "consumer" and "empowering" individuals. To do what, exactly, Revolution never seemed to say. It offered a grab bag of information and services -- doctor and hospital finders, drug and drug-interaction information, community forums and symptom checkers, even a health-insurance comparison tool -- in apparent hopes of turning itself into a one-stop shop of sorts for people interested in, well, doing something related to their health.

Unfortunately, trying to do all things often means doing none of them particularly well, and Revolution had the misfortune to launch many of these services right at the time when venture capitalists were throwing money at scads of "Health 2.0" startups who were busily pushing out the envelope on most of these fronts.

More to the point, though, neither Case nor anyone else associated with Revolution ever seemed to grasp exactly what sort of "revolution" was both possible and desirable in healthcare. Giving people more control over their health decisions is certainly a laudable goal, but it's also a woefully inadequate one in a world where health-plan costs continue to escalate, insurers can deny coverage for even minor pre-existing conditions, and doctors and hospitals have every incentive to overtreat patients in ways that can easily leave them worse off than before. Not to mention one in which the term "consumer empowerment" is often code for "sticking individuals with a bigger share of their medical costs."

(For a glimpse at the depths of Case's cluelessness, you don't have to look much further than a recent Q&A in Portfolio, where he described the company's goal as providing a sort of "health dashboard" that would monitor, say, a family's health and suggest effective, low-cost healthcare options.)

So, here's some free advice for the next wealthy serial entrepreneur who thinks they can change the healthcare system: Focus on one thing and do it well, and think hard about taking on a truly fundamental challenge -- like busting up the ossified health-insurance system, for instance.