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How Oculus Could Help Facebook Break Into Health

By Leo Sun - Mar 29, 2014 at 3:00PM

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Could Facebook’s $2 billion purchase of Oculus VR help it gain ground against Google and Microsoft in this frequently overlooked industry?

Facebook ( FB -2.36% ) recently stunned the world by buying Oculus VR, the maker of the virtual reality headset Oculus Rift, for $2 billion. Oculus Rift started out on Kickstarter, where it gained popularity as a niche gaming device frequently praised for its immersive tech, but occasionally mocked for its appearance.

Facebook's purchase of Oculus VR initially made little sense compared to the $1 billion it paid for Instagram and its $19 billion acquisition of WhatsApp. Purchasing Instagram added a parallel photo sharing social network to its own, and it gained over 450 million new mobile users by acquiring WhatsApp. Buying a VR headset company for $2 billion, on the other hand, seemed reckless and impulsive to many analysts and investors.

The Oculus Rift. Source: Wikipedia.

Yet there's an ambitious side to the acquisition many investors are ignoring -- the fact that the $300 headset can be used as a VR telepresence device. Speaking about the Oculus Rift, CEO Mark Zuckerberg stated: "Imagine enjoying a courtside seat at a game, studying in a classroom of students and teachers all over the world, or consulting with a doctor face-to-face -- just by putting on goggles in your home."

Therefore, Facebook acquired Oculus as a virtual extension of its social network of 1.3 billion users. Of the three examples of virtual telepresence that Zuckerberg mentioned, telehealth -- the practice of remotely visiting a doctor -- is certainly the most fascinating. It's also a high-growth market -- research firm IHS predicts that the U.S. telehealth market will grow from $240 million in 2013 to $1.9 billion by 2018.

What Facebook has learned from Google and Microsoft
The telehealth market is ripe for disruption since the current solutions are still relatively new.

Last November, Google ( GOOGL 1.24% ) evolved its Google Answers online knowledge marketplace into Google Helpouts, a platform which allows Google-vetted experts to answer questions about a wide variety of topics. The site integrates into Google's social network, Google+, and payments are made via Google Wallet. The experts can charge clients per session, per minute, or both, and Google takes a 20% cut of the fee. The sessions can be conducted via text, voice, or video.

To encourage the use of Google Helpouts as a health care platform, Google waives the 20% fee for all health care related questions. Merging a social network and a telepresence platform with health care professionals means EHRs (electronic health records) and cloud-connected medical devices could eventually be synchronized to Helpouts as well.

Meanwhile, Microsoft ( MSFT 1.29% ) has tested the Kinect as a telehealth device through Avanade, a joint venture with Accenture ( ACN 2.92% ). Since the Kinect tracks physical movements via a camera, it can be used to conduct remote physical examinations. A physician can give instructions to the patient via Skype, and the patient's health data can be accessed and updated over the cloud via Microsoft's HealthVault EHR program.

How the Oculus Rift could disrupt the telehealth market
That's where Facebook comes in. As the largest social network in the world, Facebook already has the necessary connections to build a massive telehealth network.

The Oculus Rift has a stereoscopic 3D display within its goggles and is controlled via head movements and external controllers. A treadmill, known as the Virtuix Omni, allows Oculus users to walk around in the virtual game environment.

The Virtuix Omni treadmill being used with the Oculus Rift. Source: Wikimedia Commons.

Whereas that setup would be fun for games, it would also be an ideal one for telehealth checkups. Just like Google Helpouts and Microsoft's Skype, the Rift could be Facebook's virtual platform for remotely visiting the doctor. Facebook also has a new payment system similar to Google Wallet, which can be used to pay medical bills. And just like the Kinect, Virtuix's treadmill could track a patient's movements, which could be sent over the Internet to the physician.

Albert "Skip" Rizzo, a clinical psychologist and associate director for medical virtual reality at the University of Southern California's Institute of Creative Technologies, has researched the ability of the Rift to treat soldiers with post-traumatic stress disorder (PTSD).

Virtual Iraq, a simulator used to treat PTSD with the Oculus Rift. Source: Company website.

Dr. Rizzo immerses patients in a virtual reality program known as Virtual Iraq, which recreates a combat environment through weather conditions, ambient sound, and insurgent attacks -- all of which are carefully monitored and controlled by the clinician. Virtual Iraq has since been adopted by several military medical centers and 55 veterans affairs clinics across the United States.

The success of Virtual Iraq suggests that the Rift could also be used to help treat other issues. If similar software were connected to a telehealth platform, those sessions could be conducted at home.

Potential challenges for the Rift as a telehealth device
Although all of those applications sound incredible, Facebook has a lot of obstacles to overcome if it intends on using the Rift as a VR telehealth device integrated into its social network.

The first is the issue of HIPAA (Health Insurance Portability and Accountability Act) compliance. HIPAA laws were only intended to regulate providers, insurers, and health care clearinghouses that accept payments electronically. They weren't intended to regulate video chat sessions -- therefore, as the telehealth market grows, regulations could increase.

The second is the fact that Facebook is a casual social networking platform not generally associated with health-related issues. If Facebook intends to use its social networking muscle to grow its telehealth presence, it will have to set up some kind of new "Facebook Health" platform to ensure that confidential health data and selfies aren't flowing into the same News Feed.

The Foolish takeaway
It's certainly hard to imagine Facebook suddenly becoming a telehealth platform, or the Oculus Rift becoming a medical device. Yet Mark Zuckerberg specifically mentioned virtual doctor's visits, and Facebook now owns all the necessary pieces to take a giant leap forward in telehealth. It's now just a matter of whether -- and how -- he intends to put all the pieces together.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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