Intuit's Health-Care Deal Grabs a Billion-Dollar Opportunity

Seeing huge potential for growth, major tech companies like IBM (IBM) and Oracle (ORCL) are investing heavily in health care information technology, often through acquisitions. In fact, Oracle recently shelled out $685 million for Phase Forward (PFWD), which builds software to automate clinical trials.

Another interesting player also wants a piece of the action: Intuit (INTU). As an indication of its seriousness, the maker of TurboTax and QuickBooks financial software has agreed to pay $91 million for Medfusion, a provider of Web-based services for electronic health-care records.

While this health-care strategy may seem unusual, it does make sense. And, if Intuit can pull it off, the company may have a strong growth driver for many years to come.

A Look at Medfusion

Founded in 1996, Medfusion set out to build a platform to manage the complex relationships between patients and health-care providers. It was an ambitious effort and took lots of investment.

But Medfusion realized it needed to go beyond typical record-keeping and expense tracking. So, the company added features like appointment scheduling, bill payment, lab results summaries, prescription refills and surveys. At the same time, the software needed to be secure and compliant with the various medical regulations, such as HIPAA privacy rules.

Medfusion was also savvy in making its software eligible for the $44,000 subsidy for physicians (part of the American Recovery and Reinvestment Act). This has certainly helped to boost adoption. As of now, Medfusion's platform has a base of roughly 30,000 health-care providers.

The Next Big Thing for Intuit?

Over the years, Intuit has created a solid business by developing self-service technologies for consumers and small businesses. Just look at its TurboTax franchise, which continues to grow at a healthy rate. In fact, it looks like the company is making inroads against traditional tax software providers like H&R Block (HRB).

And in a way, the health-care industry is similar to the tax-advisory business. The government regulations are complicated and continue to change, so easy-to-use technology can be a big help. Keep in mind that a recent national survey from Intuit shows that roughly 70% of Americans are concerned about managing their health-care bills.

Interestingly enough, Intuit has already been developing health-care products, such as its Quicken Health Expense Tracker. Such offerings help users to understand medical benefits as well as reduce costs.

Thus, with the addition of Medfusion, Intuit will greatly expand its footprint and offerings. There are also cross-marketing opportunities -- Intuit's QuickBooks customer base includes about 75,000 medical practices.

Something else: an Intuit survey shows that 72% of consumers would use an online tool for health care. If the software maker can do the same in this industry as it has done with taxes, it may have another billion-dollar market opportunity on its hands.