Article

The wellspring of life

Using kiosk and online applications, Portland, Ore.-based company Healthnotes Inc. delivers health and nutrition information at about 6,500 locations in the United States and United Kingdom.

February 21, 2002

For Anne Greenfeld, an asthma sufferer living in Louisville, Ky., relief from the respiratory condition is difficult because her system cannot tolerate the asthma medication Albuterol.

But earlier this year, she discovered a Healthnotes kiosk at a local Kroger supermarket. She learned that avoiding eggs or switching to a pure vegetarian diet might help her. She also researched how asthma, foods, medicines and herbal remedies interacted.

"There were all kinds of other ways I could be treated, that I did not learn from my doctor," Greenfeld said. "The thing I found most impressive was that it was so extensively documented, with credible references."

Healthnotes Inc., a 40-employee company based in Portland, Ore., specializes in developing easy-to-read, thoroughly researched medical information written by doctors and pharmacists.

"We've been following on a permanent basis more than 550 scientific and medical journals in order to make sure we keep our information balanced and credible," said Michael Peet, Healthnotes vice president of sales, marketing and regulatory affairs.

The information is made available through a network of kiosks at about 6,500 locations in the United States and United Kingdom.

Too much information

Peet and chief executive officer Skye Lininger founded Healthnotes in 1986. Both are veterans of the vitamin supplement industry and were concerned over the flood of products swamping the market.

"The proliferation of products on the shelf is just phenomenal," Peet said. "The inventory in a good vitamin store will probably be more than 3,000 SKUs (product codes)."

At first, Peet and Lininger used a more traditional means of educating retailers and consumers-publishing a newsletter. After a few years the newsletter, which is still published, amassed a wealth of research that daunted consumers.

"They've got to go flicking through two or three full binders of back issues to find that article," Peet said.

Peet and Lininger began researching new ways to educate both retailers and their customers. That led to the idea of making information available electronically.

"As computer technology began to evolve in the late `90s, it became pretty clear we could put together a system that would run under HTML," Lininger said.

New tech, new medium

Peet and Lininger hatched their idea in 1995 while celebrating the Fourth of July on a Hawaiian beach.

"I was sitting there enjoying the fireworks and something clicked in my mind," Lininger said. "I thought, `we could put together an information database and run it under HTML and I bet that would be useful for stores.' "

They invested $20,000 each in the project and built an alpha version. Healthnotes began appearing in stores in 1996. Healthnotes Version 1 focused on 10 herbs and 10 vitamins. The company now offers online and kiosk versions of Healthnotes.

Healthnotes Version 7 features a database of cross-linked articles presented on a touchscreen. Using the kiosk, customers can browse sections on health concerns, vitamins, herbal remedies, homeopathy, safety, food notes, recipes, sports nutrition, and weight management. The sections are part of three main Healthnotes products: Food Notes, Health Notes and Safety Checker.

The Healthnotes content does not favor any brand. Companies that sell over-the-counter drugs are regulated by the Dietary Supplement Health Education Act (DSHEA), which prohibits these companies from sponsoring third-party literature.

Healthnotes became profitable this summer and closed a round of venture capital funding in mid-September. Among the VCs participating is North Castle Partners LLC, a Greenwich, Conn.-based firm that specializes in the healthy living market.Lininger declined to say how much VC money Healthnotes took in.

Pricey but practical

Healthnotes licenses its content for $1,595 per kiosk, though cost can vary depending on the number of stores involved in a purchase. Each of its three product lines can be licensed separately.

One company willing to pay the price is PCC Natural Markets, a seven-store chain located in Seattle. PCC has been a Healthnotes customer since 1997, licensing a kiosk for each store.

The Healthnotes screen gives users a myriad of categories to choose from.

PCC health, beauty and cosmetics category manager Eva Vinson said Healthnotes was a practical investment for the chain.

"It's a hefty price, but if you average it out over how useful it is, and if you look at it not just as a consumer outreach expense but also as a staff education expense then the price per hit comes down considerably," Vinson said.

Besides staff and customer education, Vinson said Healthnotes is useful when staff are not available.

"As much as we like to have beautifully educated staff on the floor every hour that we're open, it's just not feasible," she said.

PCC uses a simple PC-in-a-box setup, a system Healthnotes recommends for smaller chains, independent stores and pilot projects. The hardware is provided by NBG Solutions Inc., a Portland-based integrator.

Healthnotes also has partnerships with IBM Corp. and NCR Corp. to use their kiosks. Peet said the company will work with any customer's preferred hardware provider.

Healthnotes is now emphasizing networked kiosks so that updates - such as the most recent one to Version 7 -- can be done automatically. The current software maintenance system requires manual updating by the retailer using CD-ROMs.

"Getting them (retailers) to update via our current model with them is quite difficult, because it's via CD-ROM, which is quite tedious to get updated in a store environment unless we're going out to load it ourselves," Peet said.

The bottom line

While Peet and Lininger are happy with Heathnotes's success as a company, measuring the program's effectiveness at the retail end has been harder to judge.

Vinson said it would be difficult to credit Heathnotes for improving business.

"We've had slightly higher increases in key departments than the general trend in our industry for those products, but I'm not sure I can attribute that specifically to Healthnotes," she said. "I'm more likely to attribute the growth that we've had to our new advertising programs in the last year and outreach activities with our members."

Peet believes one way to encourage in-store sales is to adjust the product for each department. Safety Checker can be made available in the pharmacy, for example, while Food Notes operates in the dairy, seafood, poultry and meat departments.

"We believe having the right application being uppermost on that kiosk screen at that point is highly important," he said.

But for Healthnotes to raise profits, shoppers must be able to find the kiosks, something that is out of the company's control. Greenfeld, the asthma sufferer, said she never spotted any advertising at Kroger encouraging customers to use the kiosk.

Lininger believes that lack of in-store promotion is a common problem in the kiosk industry.

"I believe the best practices in the industry have not been developed as to how to display signs and promote the use of kiosks," he said.