What do you get when you combine Google Inc (NASDAQ:GOOG) and health care? For many, the answer to that question might be “failure.” After all, company’s personal health record service, Google Health, was shut down in 2011 because it didn’t have the “broad impact” that the company thought it would.
Despite that experience, buying Google Inc (NASDAQ:GOOG) stock actually could be a smart health care investment alternative. Here’s how.
Searching for savings
The Patient Protection and Affordable Care Act, commonly known as Obamacare, has already ushered in several major changes in health care, but the most significant impact yet will be felt in 2014. That’s when uninsured Americans will be required to purchase health insurance and employers with more than 50 full-time workers must offer insurance or pay fines.
Google Inc (NASDAQ:GOOG) looks to be among the winners created by health reform as more people shop for insurance. Already, 75% of individuals seeking to buy insurance used a search engine to obtain information about plans. Many of them, around 64%, compared prices and benefits between different plans online. Millions of additional Americans will likely do the same next year — creating more advertising revenue for Google in the process.
Google Inc (NASDAQ:GOOG) should also benefit as social media becomes increasingly important in how insurers attract these new members. UnitedHealth Group Inc. (NYSE:UNH) is among a handful of companies at the forefront of this wave. The large insurer has several YouTube channels that educate consumers about health care options.
UnitedHealth Group Inc. (NYSE:UNH) and fellow insurers that offer Medicare Advantage plans also seem likely to increase spending for online search engine advertising. Search queries for Americans age 65 and over have doubled since 2010. Research shows that 84% of U.S. senior citizens now use the Internet.
Of course, health care encompasses more than just insurers. Google Inc (NASDAQ:GOOG) is also in position to profit as more health care providers — including physicians, dentists, hospitals, and nursing homes — appeal directly to consumers who have financial incentives via high deductibles to control medical spending.
Eyes on the future
Perhaps an even bigger way that buying Google stock could pay off as a health care investment is through Google Glass, its Internet-enabled glasses technology. Multiple possibilities exist for use of Google Glass in improving health care.
Physicians and other medical professionals could use Google Inc (NASDAQ:GOOG) Glass to access patients’ electronic charts without the need to carry other electronic devices. The potential exists for recording interactions with patients and archiving for later reference. Surgeons could consult with other medical professionals across the globe during surgery, sharing the first-hand view of the patient as seen by the surgeons.
Many intriguing health care uses of the technology exist for patients also. For example, a patient with health problems that require a strict diet could wear Google Glass as she shops for groceries. Future applications could help the person find foods that meet her dietary requirements as she looks at the products on the shelf.
Google Health redux?
There are drawbacks for thinking of Google Inc (NASDAQ:GOOG) stock as a potential health care play. While the company should benefit from increased advertising related to health reform, those additional dollars could just be a drop in the bucket for an enterprise that generated more than $50 billion in revenue last year.
And while Google Glass seems like a cool technology with lots of health care applications, there are plenty of concerns — particularly relating to privacy. Google Health also seemed cool a few years ago, with former executive Marissa Mayer stating in 2008 that the service could eventually include “thousands of partners and millions of users.” That proved to be a wee bit optimistic.
Nevertheless, I still think that buying Google Inc (NASDAQ:GOOG) stock could be a smart health care investment choice. Online advertising and social media use is on the upswing in health care, which comprises around 18% of U.S. GDP. Google Glass has the potential to revolutionize the world of health care. Google Health might have failed, but I suspect Google plus health care could mean success in the days ahead.
The article Is Buying Google Stock a Smart Health Care Play? originally appeared on Fool.com and is written by Keith Speights.
Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Google and UnitedHealth Group Inc. (NYSE:UNH). The Motley Fool owns shares of Google.
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