Healtheon was a dot-com
Dot-com company
A dot-com company, or simply a dot-com , is a company that does most of its business on the Internet, usually through a website that uses the popular top-level domain, ".com" .While the term can refer to present-day companies, it is also used specifically to refer to companies with...

 startup company, created in Silicon Valley
Silicon Valley
Silicon Valley is a term which refers to the southern part of the San Francisco Bay Area in Northern California in the United States. The region is home to many of the world's largest technology corporations...

 by Dr. James H. Clark
James H. Clark
James H. Clark is an American entrepreneur and computer scientist. He founded several notable Silicon Valley technology companies, including Silicon Graphics, Inc., Netscape Communications Corporation, myCFO and Healtheon...

 and Pavan Nigam. Healtheon's business plan
Business plan
A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals....

 was to streamline communication and paperwork in the United States health care system
Health care system
A health care system is the organization of people, institutions, and resources to deliver health care services to meet the health needs of target populations....

. They developed software that placed their company between physicians, patients, and health care institutions, eliminating unnecessary paperwork and facilitating networking and communication amongst the three.


In mid-1995 Clark decided his next venture (after Netscape
Netscape Communications is a US computer services company, best known for Netscape Navigator, its web browser. When it was an independent company, its headquarters were in Mountain View, California...

) should tackle the health care industry. Weeks after Netscape's historic IPO, a meeting of venture capitalists (from Kleiner-Perkins and New Enterprise Associates), physicians, and technologists was held at Netscape's offices in Mountain View, California to lay the groundwork for the company. No consensus emerged on the business model. Nevertheless, a group was assigned to write a business plan. Tellingly, the business plan was never written. Nevertheless, a company, called Healthscape, was formed in early 1996. When the domain name could not be acquired for a reasonable price, the name was changed to Healtheon. The early days of Healtheon were marked with strategic disarray. The initial team, consisting almost entirely of software engineers, set about building a scalable, secure, fail-safe platform that would host the company's later products. This was deemed essential, because, at that early point in the Internet boom, the idea of conducting business online was widely regarded as insecure, constrained, and failure-prone. The question of what healthcare services to build remained unsettled. An extensive collection of medical content was initially envisioned, but when no revenue opportunities could be identified, this was all but abandoned. Ultimately, the company tackled the administrative burdens faced by health plans. Healtheon attempted an initial IPO in July, 1998. This share offering was canceled after a skeptical article appeared in the Wall Street Journal. The company refiled and went public in February 1999. Healtheon's IPO consisted of 5 million shares priced at $8 each. With initial demand for over 40 million shares, Healtheon's price rose over 400% on the first day of trading; it was one of the most successful IPOs to date. The stock price peaked at more than $120 per share later that year, when a merger with Atlanta-based, Microsoft
Microsoft Corporation is an American public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions...

-backed WebMD
WebMD is an American corporation which provides health information services. It was founded in 1996 by Jim Clark and Pavan Nigam as Healthscape, later Healtheon, and then acquired WebMD in 1999 to form Healtheon/WebMD...

 was announced. The merged company was named Healtheon/WebMD, although Healtheon was the surviving corporate entity. Today the company operates under the name WebMD
WebMD is an American corporation which provides health information services. It was founded in 1996 by Jim Clark and Pavan Nigam as Healthscape, later Healtheon, and then acquired WebMD in 1999 to form Healtheon/WebMD...

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