Tech Looks to Raise Bets on Healthcare

LONDON (Reuters) -An aging population, spiraling medical costs and increasingly poorservice are spurring more computer firms to bet on healthcare and whatmany of them see as a lucrative — but relatively untapped — market.

Expectations for an overhaul of the U.S. health system following the election of Barack Obamaas president and a desire of governments worldwide to drive costs ofnational health systems reinforce the belief that healthcare is anopportunity that tech companies underestimate at their own peril.

"Healthcare is a $2.5 trillion market in the United States alone,"said Andrew Rocklin, an analyst at Diamond Management & TechnologyConsultants, in the United States.

"Anybody who chooses not to participate could be giving up a potentially large amount of revenue."

That message is echoing through Silicon Valley and beyond, reachingcompanies with seemingly little or no immediate connection to thehealth field.

One example is chip-maker Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz),which earlier this month introduced a monitoring system that allowsdoctors to check in on patients with chronic conditions like diabetesfrom remote locations.

The product is among the first to emerge from its digital healthunit formed in 2000 to target new ways to get the company’s chips intodifferent products and look for other ways the company might compete inhealthcare.

Intel has tried — and failed — in the past to offer brandedproducts such as microscopes and music players containing its chips toride growing trends to new profits.

Netscape founder Jim Clark’s next venture after creating thepioneering Web browser company was Healtheon, a company that even afterit merged with WebMD has struggled to turn using the Web to streamlinepaperwork into a big business.

But it sees technology as a more sure-fire way to meet an urgent –and long-lasting — need for new tools to help people to do things likemanage chronic diseases and manage their own health more easily.

"Intel believes the personal healthcare marketplace is amultibillion dollar greenfield opportunity," Eric Dishman, globaldirector of product research and innovation at Intel’s Digital HealthGroup, told Reuters in an interview.

"Initially we thought we would sell chips into the new market butfrankly there was no market to build them for. What we are doing ispretty radical for Intel."

Industrial giants like General Electric (GE.N: Quote, Profile, Research, Stock Buzz), Siemens AG (SIEGn.DE: Quote, Profile, Research, Stock Buzz) and Philips (PHG.AS: Quote, Profile, Research, Stock Buzz) have long competed in the health field and all expect even more growth.

GE’s $17 billion healthcare unit recently estimated its informationtechnology business — computers that help doctors track everythingfrom X-ray images to drugs patients have been prescribed — could growto a $5 billion to $7 billion business, up from the about 10 percent ofrevenue it currently represents.

And newcomers, including start-ups looking for an early jump into ahot area, are eager for a slice of an overall healthcare informationtechnology market worth an estimated $50 billion or more.

Apple (AAPL.O: Quote, Profile, Research, Stock Buzz),for example, offers a range of applications for its iPhone to gets itspopular Internet phone device into the hands of doctors and allow themto quickly access drug and other medical information.

A drive to organize health records electronically has also attractedthe likes of Google and Microsoft. In May, Google introduced GoogleHealth, a Web service allowing people to share health information withdoctors and insurance companies that competes with Microsoft’sHealthVault and others.

Reform of the U.S. healthcare system is a big factor but companiesand experts say the opportunity is universal, extending to otherdeveloped countries and emerging markets too.

In July, the European Union launched two initiatives to study howdoctors can access their patients’ electronic records across countriesand to look at how to link pharmacies across the region.

"As we learn what to do with all that information, it will call onthe need to have the right devices to gather and deliver thatinformation," Diamond Management & Technology Consultants analystRocklin said.

Google’s plan aims to help people organize and gain greater controlover their personal health information, said Roni Ziegler, a productmanager for Google Health.

The Web search giant at the moment does not plan to use ads on itsGoogle Health site. But winning more traffic there will likely spurvisitors to other areas of Google where it does sell ads.

One hurdle is overcoming a reluctance to divulge health informationover the Web. But once this happens — as it eventually has with onlinebanking and shopping — expect a spate of other technology companies toaggressively challenge for share in that market.

"You could make a case for putting as big as a number you can thinkof on the healthcare opportunity," Ziegler said. "If people are comingup with tools to truly help people take care of themselves that issomething people are willing to pay for."

(Editing by Chris Wickham)

 

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