Last year was a banner year for digital health funding when, according to accelerators Rock Health and Start up Health, all records were smashed when over $4 billion of venture funding was poured into the digital health space. This is no longer surprising especially given the double-digit growth of VC funding in this sector over the past few years.
Likewise, the boom in the digital health sector comes as no surprise as well.
We are talking about a sector where everyone – be they a patient, provider or payer – is dissatisfied with the current situation. Compared to the exponential growth of technology over the past decade, the healthcare sector just has not caught up. But in 2014, and spilling great hope into 2015, we are finally starting to see actual outcomes. We are starting to see several real sustainable businesses emerge from this digital health revolutionary movement.
According to Rock Health’s end-of-year 2014 report, the top categories for digital health funding last year were:
- Big Data and Analytics ($393 million)
- Healthcare Consumer Engagement ($323 million)
- Digital Medical Devices ($312 million)
- Telemedicine ($285 million)
- Personalized Medicine ($268 million), and
- Population Health Management ($225 million).
In my recent blog post on why 2014 was a milestone year for digital health, I explored the key digital health events that happened last year. Revisiting some of those categories and digging into the current sources of need and unmet need should shed some light into the areas where growth is more likely this year.
Here are the shortlisted candidates for some of the digital health trends we have our eyes on in 2015:
Telemedicine and Clinical workflow:
Telemedicine was the category that experienced the greatest growth in 2014, with a 315% increase from the previous year and garnering almost $300million in total venture funding. The uptake and adoption of telemedicine service providers is not looking to buckle anytime soon as telemedicine is a new means of care delivery that can help to improve care and reduce costs at the same time.
Speaking of costs, each year in the US, billions are still being wasted on administrative inefficiencies within the clinical workflow. “Administrative costs in healthcare represented the second largest category of waste after unnecessary procedures, consuming approximately 15% of every healthcare dollar,” according to Wired. Given the great pressure to reduce overall hospital administrative costs, we should be looking at continued growth and investment in technology to automate workflow processes which should in turn result in lower costs associated with reporting, communication and claims.
Big Data and Predictive Analytics
While Analytics and Big Data have been consistently receiving consistent VC funding attention over the recent years, I see sustained growth in this category for 2015 based on recent motivators. First, in June 2014, openFDA was launched which opened up the availability to access and analyze large data sets for healthcare. Second, several years after the HITECH act was passed, last year we finally saw EHRs gain real traction – where a majority of physicians and hospitals in the US are on-board.
Hence, with a proper baseline infrastructure and significant pool of accessible data, the time may just be ripe for companies working on predictive analytics to be able to reliably predict the unknown (in other words, personalize care) via high-confidence algorithms that can predict actionable interventions that improve long-term health outcomes.
Digital Therapies for Population Health management:
The increasing economic burden of chronic diseases such as diabetes and cardiovascular disease – which for a large part depend on lifestyle choices – are key issues for population health policy makers in developed nations.
Well, several digital health companies such as Omada and Propeller Health that received seed funding a couple of years ago are now in the phase of commercializing their products based on a very promising business model. They are proving to the world that info tech can indeed deliver clinical outcomes through what we can term as digital therapies.
So if we are able to see more software-based programs that can effectively motivate behavior change, digital therapies acting as preventive health agents could prove to be of great interest to public health policy makers.
Quantified Self Tools:
Despite the explosion of all sorts of personal health tracking tools in recent years – from wearable to implantables to ingestibles – there is still great potential when it comes to user adoption and usage. Also it is interesting to note that today, while there are slightly under 100,000 apps currently available under the Health & Fitness category of Google Play and Apple Store, the top 10 apps are the ones leading the lion’s share of downloads – hence pointing to the profusion of such apps out there but a scarcity of truly well designed and useful ones. Well the good news is that last year we saw the customer being placed back into the wearables equation. This should lead the trend into 2015 where aesthetics and design will play key roles alongside functionality in the development of such tools. This should break another barrier in user adoption and uptake.
What about the unmet need when it comes to medical trackers for the chronically ill? This great delta of potential is what will continue to drive investment and growth in this category.
Given the stellar year that 2014 represented for digital health, it will be most exciting to see how and where VCs place their bets on this year. In the meanwhile, I cannot wait to see the innovations that will result.