Is Buying Intel Stock a Smart Health Care Play?

Healthcare is bigger than just health care. That's been my driving thought over the last couple of weeks as I have explored the pros and cons of why some companies that aren't truly health care companies just might be smart health care investments. With this in mind, my latest focus is on whether buying Intel (NASDAQ: INTC  ) stock could make sense for investors looking to profit from the growth of health care. What's the verdict? Let's take a look.

The next space race
Eric Dishman, Intel fellow and general manager of the company's Health Strategy & Solutions Group, says that building out a health care infrastructure to handle global aging is the "space race of the 21st century." When asked why Intel is so heavily involved in health care, Dishman responded by pointing out how microprocessors have become part of the "fabric of our everyday lives." Since health care is part of those everday lives, "Intel is in health care."

Dishman isn't kidding. Intel is in health care in a major way. Perhaps the most obvious example is the company's Care Innovations joint venture with General Electric (NYSE: GE  ) . GE Healthcare and Intel teamed up in 2011 to develop home-based health technologies. GE Healthcare contributed its Quiet Care remote passive activity and behavioral monitoring system for seniors to the venture, while Intel threw in its Intel Health Guide personal health and monitoring system.

Care Innovations also offers other products and services, including consulting to help senior living organizations deploy patient monitoring technology. The joint venture has seen some successes, particularly being named by Frost & Sullivan as its 2012 North American Competitive Strategy Leadership Award winner.

Intel joined forces in March with several other big companies -- Dell (NASDAQ: DELL  ) , RedHat (NYSE: RHT  ) , VMWare (NYSE: VMW  ) , and Epic Systems. The companies, going by the acronym DRIVE, operate a facility near Epic's headquarters in Wisconsin that allows hospitals to test and deploy new software on Linux servers. Epic provides the software. Dell provides the servers -- with Intel inside, of course. Those servers use RedHat's Enterprise Linux operating system and VMWare's VSphere virtualization platform. The goal of this effort is to demonstrate to small and medium-sized hospitals that the solution involving the DRIVE companies is a cost-effective approach that meets their needs. 

The giant chipmaker also recently announced a partnership with Oregon Health & Science University to develop high-performance computing technologies for personalized medicine. The collaboration's first projects will attempt to create genetic profiles of tumors with the goal of identifying patterns that help determine how effective targeted treatments might be. 

Of course, Intel's bread and butter comes from supplying processors for mobile devices, personal computers, and servers. Use of all of this hardware is growing as government regulations and competitive pressures push health care providers to implement technology. The company's product line includes cloud solutions for electronic medical record systems and health information exchanges and security solutions for ensuring the privacy and security of health data. 

Gold rush
While I like Dishman's space race metaphor, there's another analogy that fits -- a gold rush. Back in the days of America's previous gold rushes, lots of players rushed to the scene as soon as gold was discovered. Some struck it rich, but many didn't do so well. That same scenario will likely play out with the health care gold rush. There's a lot of money to be made, but not all will succeed.

I think Intel will be one of the success stories. The main reason why I think so is that Intel is more akin to the suppliers of shovels than the gold miners themselves. Intel can win in nearly every facet of health care -- providers, payers, pharmaceutical companies, medical device makers, software companies, and more -- by providing solid underlying technology that helps these organizations succeed. Is buying Intel stock a smart health care play? It just might be as good as gold.

When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, a Motley Fool analyst runs through all of the key topics investors should understand about the chip giant. Click here now to learn more.