WebMD acquires skills in high-end services

Continuing its transformation from dot-com darling to health-care services provider, WebMD on Monday announced it will buy ViPS, which offers decision support and consulting services, for $160 million.

WebMD--the early pioneer of the health-care portal aiming to connect consumers, hospitals, physicians, payers and other players--has more recently become a $1 billion provider of more mundane services such as claims processing and medical management software for physician offices.

In acquiring the privately held ViPS, WebMD is attempting to add another dimension to its offerings, reaching out to health-care payers such as insurance companies, HMOs and Medicare.

"WebMD has not bought a company like ViPS before," said Eric G. Brown, vice president of health care at Forrester Research. "It is diversifying its portfolio away from claims processing."

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ViPS has moved into high-value services like disease management, quality improvement, fraud prevention and predictive modeling. These tools allow payers to get in-depth information of both clinical and financial performance. For example, disease management monitors patients with chronic conditions such as asthma or diabetes.

"The integration of ViPS' capabilities will enable these (payer and employer) customers to better communicate with their members and providers about treatment and utilization issues to improve the effectiveness of care," Roger Holstein, CEO of WebMD, said in a statement.

In 2003, ViPS had about $59 million in revenues and earnings before interest, taxes, depreciation and amortization of about $17 million. The $160 million purchase includes cash and assumption of debt.

"ViPS is a good fit for WebMD," Brown said.