For Dr. Henry Eisenberg, a surgeon at Cleveland's Hillcrest Hospital, a 10-week course on managed care at Johns Hopkins University seemed almost a necessity.
"None of us was trained in business when we went to medical school," he said. "And because we're dealing with these HMO plans and medicine has become big business, there is a need for education."
What makes Eisenberg's experience in Hopkins' 4-year-old business of medicine program unusual is that he never set foot in Baltimore.
Eisenberg took his course in a Cleveland classroom with help from a satellite connection linked to a Baltimore studio through Caliber Learning Network Inc., a Baltimore company that wants to link the nation's top graduate programs to workers nationwide.
Last week, Caliber said it would deliver at least two graduate certificate programs by next September as part of an agreement with Columbia University's Teachers College. This fall, the company will start a program with the Wharton School at the University of Pennsylvania.
"Our basic premise is there's a market for Wharton business programs outside the Philadelphia area," said Chris L. Nguyen, president and chief executive officer of Caliber.
Caliber is a joint venture of Sylvan Learning Systems Inc. and MCI Communications Corp.
Others also want a piece of a lucrative and growing market in linking ivory towers to satellite broadcasting, video-conferencing and Web-based training. Corporations budgeted $60 billion in 1997 for employee training, 30 percent percent more than in 1990.
Caliber expects competition. Westcott Communications Inc., for example, has a one-way satellite-based connection used by many companies that could be converted into an interactive network.
Universities interested
Top universities are also looking at the market. Stanford University plans to award master's degrees in electrical engineering entirely online for the first time this fall. Duke University's Fuqua School of Business offers a 19-month MBA degree program to students around the world. Oxford University, Britain's oldest and one of the world's most prestigious universities, says it plans to offer degree courses over the Internet beginning next year.
Marian Moore, associate dean for executive MBA programs at Duke's Fuqua School, expects to see even more movement toward distance learning.
"Once they begin to see the technology, the best schools are going to recognize what's unique about their brand name," said Moore, who is also a marketing professor. "Whatever their delivery system is going to be, we'll see lots of people trying new things."
Caliber got its start after Baltimore-based Sylvan conducted video-conferencing sessions to train employees around the country. The idea behind those sessions -- and Caliber's approach -- is that conventional "top-down" communications systems filter the message as it changes hands.
"When you train the trainer, there's a diminution of the message," said Nguyen, 36, who was vice president of Sylvan's computer-based testing division before being tapped by Sylvan executives to run Caliber.
Organized in November 1996 by MCI and Sylvan, Caliber spent more than a year gearing up, with $4.5 million investments in technology and construction of 41 locations nationwide. Since its inception, Caliber has spent $10.5 million for operations.
In May, the company completed an initial public offering of 5.7 million shares that raised $58 million. After the offering, Sylvan and its executives owned about 35 percent of shares outstanding. MCI, which is being acquired by WorldCom Inc. , owns about 10 percent.
All the while, losses mounted.
Caliber reported $15.2 million in losses during its first year and said it expected significant losses for at least the two next years. Last month, the company reported a net loss for the first six months of $14.9 million.
Shares of Caliber, which went public at $14 and rose above $20, closed at $8.9375 Friday.
Trace Urdan, a BT Alex. Brown analyst, said Caliber is suffering from the boom-and-bust affliction that has made Internet stocks volatile. "A buzz around the stock attracted momentum investors who became impatient with the stock at about $20," he said.
The company has performed as it said it would, he said, but investors are hungry for good news.
"They need to see another big academic contract, or they need to see a big corporate contract," he said. "With the company projecting losses, it definitely has some big risk elements to it."
Still, BT Alex. Brown has a buy rating on the stock.
"What's become crystal clear to employers and employees is there's a significant payback from incremental training and incremental education for workers," said Peter P. Appert, a colleague of Urdan at BT Alex. Brown.
'A big market'
"This is a big market, it's a growing market, and it's a changing market. And there are no leaders. It's just a wide-open category."
Caliber is going after the corporate and academic markets.
On the corporate side, Caliber is trying to sell companies on the need to have training sessions on their campuses. Last month, the company landed a six-figure contract to help Deloitte & Touche LLP deliver classes to tax professionals around the country.
Caliber wants only a piece of a piece of the academic market: the very top. To get it -- and about half of the tuition revenue -- the company is putting together a dream team of graduate-level programs.
To lure those universities, Caliber is showing off hook-ups that let students interact with professors and colleagues at "campuses" that simulate college classrooms.
"We looked at the way universities teach," Nguyen said. "And we asked, 'If you want to do as good a job as that, how would you do it?' "
Hopkins saw Caliber as a chance to build on its presence outside of Baltimore.
"Working with a partner such as Caliber gives us a chance to expand that reach in a way that makes sense for us," said Betsy Mayotte, assistant dean for electronic and distance education in Hopkins' School of Continuing Studies.
Hopkins' Business of Medicine Program, which includes four 10-week courses at a cost of $6,000 per student, was first offered at Hopkins in 1994. It began its link with Caliber in April with 158 doctors participating from 19 sites nationwide.
The technology lets students ask a professor questions, which are answered as part of the discussion or passed to a teaching assistant to be answered immediately. Students can also communicate with each other electronically.
'Virtual classroom'
"You're not in the classroom, but it is a virtual classroom," said Eisenberg, the Cleveland surgeon. "It was a three-hour class in the evening with frequent breaks," allowing plenty of time for contact with other students.
For Eisenberg, the alternative would have been a weekend MBA program at Case Western University. "I just don't have that amount of time," he said.
In addition, he said, the Hopkins program was much more closely tailored to doctors' needs than any MBA program is.
Paul Gurney, an adjunct professor who taught the first course, initially found teaching in front of monitors and computers a little disorienting. But once he mastered it, the class went well.
"There are really powerful things you can do that you can't do in a class," he said. For one thing, he said, "you really have a national viewpoint rather than a parochial viewpoint."
"You lose a bit of the personal touch," he said. "I can't walk around the classroom."
After signing up Hopkins, Wharton and Columbia, Caliber should have an easier time landing other universities, Appert said.
Nguyen said many universities have been receptive.
"We're surprised," he said. "Universities have approached us. Individual faculty members have approached us."
With the hope that there are thousands of students like Eisenberg, Caliber officials said it could have as many as 300 "campuses" in the United States and Canada.
'Export opportunity'
The company is also opening a center in Barcelona, Spain, and it hopes to establish programs in Latin America and Asia. "We think it can be a huge export opportunity," Nguyen said.
In Caliber's favor are the high cost for others to get into the business and the likelihood that Caliber's costs will level out as revenues increase, Appert said. "We believe margins of 20 percent-plus can be achieved within the next four years," he wrote.
But getting too big could prove fatal. Having too many students would dilute the Ivy League-level experience that Caliber is promising, academic officials said. Already, Caliber is leaning more heavily on corporate recommendations than routine admissions procedures for acceptance to programs such as its Wharton Direct.
Moore, the Duke associate dean, said schools must fight the temptation to get huge. "When you don't have the physical facilities constraining you, you can be real tempted," she said.
Duke's global MBA program, which requires students to convene five times at centers in Europe, Asia or the Americas for a total of 11 weeks, had about 40 graduates in December 1997. The December 1999 class will have about twice that number. Moore said enrollment would likely level off at about 80.
Despite the obstacles, Caliber sees a future in distance learning that could include degree programs that -- like Duke's -- would be a hybrid of distance and classroom learning.
Nguyen said it is also possible that companies might buy training services in the future the way they pay for health care now.
Here's an example of how it might work for an information technology company: Instead of paying for workers' courses case by case, employers might use Caliber to link the company's workers with a top-notch university that specializes in a specific computer programming curriculum.
Whatever happens, Nguyen said, Caliber's partnerships will allow it and universities to compete in a global business world.
"Colleges and universities know that when geographic boundaries break down, they are going to have to compete on the basis of the quality of their programs," he said.
Pub Date: 8/16/98