In the last several years, healthcare providers and consumers have been slow, even reluctant, to embrace healthcare internet applications primarily because of the limited availability of technologies that would ensure data security in general and patient confidentiality in particular. Today, with advances in internet security technologies such as data encryption, electronic signatories and firewalls, healthcare users are more willing to adopt the internet for its many potential benefits, for example, increased efficiencies, lower cost, easier access to media-rich information and knowledge and faster decision making. Present-day healthcare consumers, for example, demand easy access to multi-media information and in-depth knowledge in order to make informed decisions. Similarly, healthcare providers and managers are interested in reducing costs while preserving and maintaining high quality healthcare. This article highlights the traditional characteristics, tasks and functions of various health services sectors including hospitals, insurance companies, physician offices, nursing homes, home healthcare agencies and pharmaceutical companies. More specifically, it focuses on the impacts of healthcare internet usage in these various sectors and presents the benefits as well as risks and concerns of modern day healthcare internet applications. © 2002 Inderscience Enterprises Ltd.