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Digital health funding: innovation growth in IT, apps, wearables

Within the past month, StartUp Health, Health 2.0, and Rock Health all have released mid-year reports on digital health funding. And the overall message: funding is strong, and enthusiasm is high.

Although each group’s methodologies vary, they agree that at least US$2.1B of funding has been funneled into this space. According to Rock Health, this has outpaced overall venture funding, as well as outpacing funding for individual software, biotechnology, and medical device sectors.

The six largest funding rounds comprise over 1/3rd of all funding thus far in 2015. These rounds include Jawbone, a consumer wearables manufacturer; NantHealth, a clinical dataset platform for providers; Virgin Pulse, an employee behavior change wellness platform; HealthCatalyst, a population health and ACO data aggregator; Doctor on Demand, a telemedicine app and service delivery platform; and PillPack, a pharmacy distribution system.

Funding is roughly equivalent to that of mid-year 2014. This, coupled with some very high-profile initial public offerings (IPO) for Evolent, Fitbit, and Teladoc, underscores digital health as a high-growth industry.

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Health 2.0 itself noted several additional trends for Q2 2015. First, the Apple Watch launched with high-profile digital health Watch apps. IBM’s Watson Health Unit has made several analytics acquisitions, Cleveland Clinic-based Explorys which hosts and analyzes 50M anonymized medical records, and Phytel, a population health management software. Finally, they made special mention of mental health platform startup Lyra Health, backed by former Facebook and Stanford employees, to help identify patients needing mental health services, provide initial screenings, and match them with treatment teams. Health 2.0 noted that the “online mental health space is crowded.”

According to Startup Health, many of the startups and companies taking on this funding are within the San Francisco Bay Area. With 53 funding deals worth US$1.5B that have taken place thus far in 2015, the amount of deals in the Bay Area have outpaced the remaining top 10 metropolitan areas combined.

Other hotspots for digital health after the Bay Area include New York City, Boston, Minneapolis, Los Angeles, and San Diego. Startup Health also notes that multi-million dollar funding deals of digital health companies have taken place in the United Kingdom, Austria, Poland, and China.

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What makes this important for healthcare providers?

Much like a review of journal articles, these three reports provide a glimpse into the future. Reading these reports can give providers and early adopters insight into overall trends in the marketplace amidst the noise of smartphone app press releases, conference panels, and exaggerated claims of clinical benefits, such as the “Brain Games Scam” covered by industry and research analysts at The Doctor Weighs In.

These reports also provide a way for providers — particularly medical informaticists and staff — to categorize and segment start-ups. For instance, StartUp Health’s report includes information on chronic disease and geriatrics health technologies.

Finally, these are potentially tools that providers and patients will use in the clinical workflow of the future. Investors place bets on companies because they believe they will be successful; providers can use this to anticipate technology changes, discuss this within their professional societies, and use this information in their own future-oriented research and clinical work.



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