Getting access to physicians’ opinions is Big Business. Now, institutional investors will have access to the brains of doctors through a relationship between Goldman Sachs and Epocrates, the point-of-care health information company.

Why is this so important? Because the health sector in the U.S. is now valued at over $2 trillion, according to a new estimate published by CMS this week. The prescription drug program, known as Medicare Part D, was responsible for driving health costs above the $2 trillion mark. This piece of the national economy can be an attractive place for investors to seek returns; however, not every segment in U.S. health care can be a fiscal winner every year, let along every quarter.

Physicians are a key demand-driver in health care; they are responsible for as much as 87% of health spending, based on prescribing drugs (driving the pharma segment), admitting patients to hospital (which drives demand for medical devices, beds, and inpatient services), and ordering tests (which drives the medical device, lab and imaging businesses). The 87% statistic comes from a report by Alan Sager and Deborah Socolar of Boston University, Health Costs Absorb One-Quarter of Economic Growth, 2000 – 2005. While the 87% number is arguable — for example, our fragmented health payment landscape has been blamed for 30-40% “waste” in the system, and doctors don’t have a lot to do with that aspect — physicians remain a major force in health spending.
Since doctors drive demand for the stuff investors want to invest in, they need to understand what’s on the minds of physicians.

Thus, Goldman Sachs made a so-called ‘strategic investment’ in Epocrates, specifically to enable the investment bank’s clients to access physician opinions about drugs and medical devices.

Epocrates has built a research panel over the past several years of 145,000 active physicians who have opted-in to do market research. Epocrates already works with at least 150 market research companies who access the opinions of this panel, ranging from perceptions of prescription drugs to what cardiologists think about the latest coronary stent.

Goldman’s subsidiary, Hudson Street Services, works with clients to deliver custom research that helps investors make decisions about what companies to back.

Health Populi’s Hot Points: The market research business for physician opinions is undergoing a sea-change. Vendors of physician-facing research are being challenged by several mega-forces, which compel a reimagining of market research processes: the adoption of the Internet and social media among physicians; physician office economics, challenging doctors to be more productive in a day by foregoing activities that aren’t seen as germane to the business of practice management; and, staying current with ever-expanding medical knowledge. Epocrates was one of the early entrants into this new environment, and achieved success because the company didn’t have a legacy of Old School research tools: prime among these being the real-time focus group. Other new entrants, such as Sermo, are serving this market. Social media and emerging IT tools are replacing the two-way mirror focus group room.

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