Second Only to Porn
By Rob Fannon, editor, The Medical Investor
October 5, 2007

"Health care" is Google's second-most searched term.

I'm not sure what the top spot – "porno" – says about the psyche of Internet surfers. But the No. 2 search term dispels a widespread assumption about the average U.S. patient...

Groups that resist a transparent, consumer-oriented health care system say individuals aren't capable of the homework required to make informed, cost-conscious medical decisions. The Google statistic, admittedly a crude proxy, indicates otherwise: Patients are interested in being savvy medical consumers.

So now there's money to be made by providing the best health care information to these consumers. An obvious play on this trend would be WebMD Health Corporation (WBMD). Investors have pocked triple-digit gains in the last two years from this online health information provider.

Another industry player is Health Grades (HGRD), which provides "report card" ratings on U.S. hospitals, nursing homes, and doctors.

And with as many as 100,000 annual deaths resulting from medical errors, according to an Institute of Medicine report, information providers like WebMD and Health Grades not only help patients stretch their health care dollar, but also choose the safest provider available.

Insurance companies and government programs like Medicare and Medicaid are waking up, too. Many new reimbursement policies now include "pay for performance" measures, tying hospital and doctor payments to safety, quality, and outcome data. One of the mainstays of our Medical Investor portfolio is a company that helps insurance providers save millions by auditing thousands of medical bills every day.

And soon medical facilities will have even more incentive to keep an eye on performance figures. The Centers for Medicare and Medicaid Services recently announced it would no longer pay for common medical conditions it labeled as "reasonably preventable," as of fall 2008. These include hospital-acquired infections, like the deadly "superbug."

I encourage you to become familiar with this obscure sector of the stock market. As Google can testify, the general public is already a voracious consumer of health care information. And with presidential elections on the horizon, companies focused on improving the transparency and efficiency of the U.S. health care market will make a pile of money.

Good investing,

Rob Fannon
Editor, The Medical Investor