This sponsored post is produced by HealthTech Capital.
HealthTech and Digital Health investment doubled in 2013 to over $2 billion. That’s enough to prove that the healthcare revolution of the century is definitely here bringing massive changes that are affecting healthcare providers and payers alike. You just have to look at the transition from fee for services to value-based healthcare delivery services to know we’ve arrived at the age of Retail Medicine with the growing empowerment of patients.
Recent healthcare IPOs by Castlight Health and Care.com have captured the curiosity of consumers, technologists, and investors. Without question, healthcare as an industry is gaining recognition as one of the hottest sectors for start-ups. This is how Anne DeGheest, Founder & Managing Director of HealthTech Capital, puts it:
“Right now, there is a tsunami of opportunities to create very disruptive healthcare companies. The country is re-shaping its largest industry, and it’s the biggest experiment we’ve ever done with the American economy.”
With other epic changes in our healthcare system — things such as accountable care organization and public or private health insurance exchanges — there are massive opportunities to develop new tools and services to provide better healthcare anywhere and at lower cost. The practical issues are how to successfully grow a sustainable HealthTech business.
This won’t just affect existing players: providers — providers, healthcare manufacturers, and payers — but also new entrants from big companies like Qualcomm, Apple and Samsung to a plethora of successful start-ups.
Along with these changes come new business models:
- Investment Dynamics – Investments in HIT/digital health have been doubling every year. In Q2, 2014, Venture capital (VC) funding in the sector more than doubled with $1.8 billion raised in 161 deals — a 104 percent increase compared to the $861 million raised in Q1 2014. Ten of those deals were for more than $50 million each.This was the first billion dollar quarter for the sector. And the $2.6 billion raised so far this year has already exceeded the $2.2 billion raised in all of 2013. It was the first billion dollar fundraising quarter for the sector which has now raised almost $7 billion in venture funding since 2010. Healthcare IT funding rounds have now crossed 1,000. Some of the most active venture investors include the 2014 Healthtech conference panelists from Venrock, Canaan, Interwest, Norwest, HLM, USVP and Merck Global Health Innovation fund.
- Diagnostics – The “Retail Medicine revolution” is being enabled by new business models where diagnostic technologies are being decentralized and brought directly to the consumer. Theranos now delivers disruptive blood diagnostic tests via Walgreens drug stores at a lower cost, requiring only a simple finger prick. Emerging Companies like Doctor On Demand and Grand Rounds bring the doctor expertise directly to the consumers when needed. There are an increasing number of higher medical-grade sensors and quantified-self technologies that are becoming more accurate or FDA-approved like AliveCor EGG mobile device.
- Care Anywhere – Value-based care will replace Fee for Services volume-driven payment system. This realignment of incentives is opening a multitude of opportunities for providing care anywhere and identifying patients that could benefit from more proactive management of their chronic disease at home via technology enabled healthcare services. However, as we’re currently in the middle of a hybrid payment system, U.S. providers are still exploring new ways to understand and control their costs better via population management. These capitated business models are still being proven.
- Aging at Home – This is one of the hottest area with new approaches using smart sensors at home, wearable technologies and smart analytics to trigger escalating alerts and intervention. These technology-enabled services are still validating their business models with multiple target customers: family/patients, capitated provider system, post discharged hospitals, and payers.
- Digital Therapeutics – Omada Health is one of the pioneers in a new category of medicine: digital therapeutics to change chronic patient behavior in order to improve outcomes and reduce costs. By validating their effectiveness with clinical trials for pre-diabetic patients, they are engaging physicians to prescribe these therapeutic apps. Third-party payers and self-insured employers are actively looking for more cost-effective solutions with validated outcomes.
There’s nothing we want more in this innovation economy than new business models. But what makes the difference between a sustainable healthcare business and simply building a product?
Successful HealthTech companies will be those that deliver a value proposition with a proven ROI for the customer. As our industry evolves, these disruptive companies continuously investigate the customer’s unmet needs, and find ways to meet them.
The key to success is to provide an ongoing solution for these critical pain points that a lot of people are willing to pay for. And technology is just the enabler.
HealthTech Conference is back on October 14 and 15, 2014 in San Mateo, CA — but this year with two full days of collaboration and workshops. Join the leaders in the healthcare industry as we discuss next steps in working together to grow successful businesses in the changing healthcare ecosystem.
“The HealthTech Conference uniquely brings together healthcare systems, payors, suppliers, entrepreneurs, and investors in practical engagement and conversation to advance innovation and technology for the betterment of humanity.” – Amir Dan Rubin, President and CEO, Stanford Health Care
Join us October 14-15 in San Mateo, Ca. Save 10% off with code VENTUREBEATHTC14.
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