Ven­ture cap­i­tal con­tin­ues to flock to star­tups tar­get­ing dig­i­tal health

Modern Healthcare - - NEWS - By Rachel Z. Arndt

Now might be a good time to head to the garage and launch that pie-in-the-sky dig­i­tal health­care startup.

Through the first six months of the year, 188 dig­i­tal health deals tal­lied an eye-pop­ping $3.5 bil­lion in in­vest­ments. If fi­nanc­ing con­tin­ues at this clip, 2017 will see $2.7 bil­lion more in in­vest­ments than 2016, when $4.3 bil­lion was in­vested, ac­cord­ing to an anal­y­sis re­leased last week by Rock Health, which tracks health­care ven­ture cap­i­tal fund­ing.

In­vest­ing reac­cel­er­ated in the sec­ond quar­ter when huge deals brought the fund­ing up to an un­prece­dented level.

Out­come Health, which de­liv­ers health in­for­ma­tion to prac­tices, raised a record $500 mil­lion in its first fund­ing round, with in­vestors in­clud­ing Gold­man Sachs In­vest­ment Part­ners and Cap­i­talG. Pelo­ton In­ter­ac­tive, which makes spin bikes and is not a tra­di­tional health­care or­ga­ni­za­tion, had the sec­ond-largest fund­ing, with a $325 mil­lion se­ries E round.

By com­par­i­son, fund­ing at this point dur­ing each of the past three years hov­ered around $2.5 bil­lion.

Firms fo­cused on con­sumer health in­for­ma­tion have led the way this year, with eight deals to­tal­ing $757 mil­lion. That re­flects the push to get con­sumers in­volved in their own care, given the shift to value-based mod­els and the re­sult­ing de­mand for in­no­va­tive, cost-cut­ting health­care de­liv­ery so­lu­tions.

“As provider re­im­burse­ment is in­creas­ingly based on out­comes, providers are more likely to in­vest in so­lu­tions that pro­mote healthy pa­tient be­hav­iors in and out­side the hos­pi­tal,” said Me­gan Zweig, Rock Health’s di­rec­tor of re­search and one of the re­port’s au­thors.

De­mand for pa­tient-cen­tric so­lu­tions has per­sisted de­spite the un­cer­tainty caused by the de­bate over health­care in Wash­ing­ton. With the prospect of con­sumers pay­ing more of their own health­care costs be­cause of high-de­ductible plans or loss of cov­er­age, providers must find ways to make health­care more af­ford­able, ac­cord­ing to Rock Health.

“Re­gard­less of the out­come of the health­care pol­icy ker­fuf­fle, we look for­ward to see­ing how star­tups will con­tinue to meet the ur­gent needs of pa­tients and trans­form health­care for the bet­ter,” Zweig and Halle Tecco, Rock Health’s founder emer­i­tus, wrote in a blog post.

Some of those star­tups, such as Health­ify—which an­nounced $6.5 mil­lion in se­ries A fund­ing last week—are ad­dress­ing pa­tients’ needs by look­ing to is­sues not typ­i­cally in­cluded in health­care. Health­ify’s soft­ware helps con­nect pa­tients with com­mu­nity or­ga­ni­za­tions that ad­dress so­cial de­ter­mi­nants of health, in­clud­ing healthy food and af­ford­able hous­ing. The com­pany will use the fund­ing to broaden its cus­tomer base and ex­pand its net­work of so­cial-ser­vice part­ners.

“Our lat­est round of fund­ing is an­other in­di­ca­tor of the lead­ing role dig­i­tal health com­pa­nies can play in sys­tem trans­for­ma­tion,” said Eric Con­ner, co-founder and chief rev­enue of­fi­cer of Health­ify. “Good dig­i­tal health com­pa­nies take the risk out of the de­ci­sion­mak­ing process.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.