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July 14, 2020
Market Lays Odds on COVID-Inspired Digital Health Tech
David Burda
COVID-19 Economics Innovation Outcomes

Market Lays Odds on COVID-Inspired Digital Health Tech

This is why I don’t gamble.  Well, more accurately, this is why I shouldn’t gamble. 

In the April 10 edition of our weekly newsletter 4sight Friday, which you could read here, I said: “It’s likely and unfortunate that the coronavirus will kill off an entire generation of digital health technologies that could have helped patients through future global pandemics.” 

First, April 10 feels like it was 14 years ago, not 14 weeks ago. Second, and to the point of this post, boy was I wrong.  Three new reports say venture capital is pouring into digital health technology companies like never before, driven by COVID-19 and investors betting on a largely virtual healthcare system in the future because of it.

StartUp Health released the first report on June 30, and you can download it here. The San Francisco-based healthcare transformation investment platform, said the healthcare innovation market attracted a record $9.1 billion in venture capital during the first six months of 2020. That exceeds the previous record of $7.7 billion in funding set in the first six months of last year.  

“Despite the uncertainties introduced by COVID-19—and in part because of them—the health innovation market remains robust and confident,” StartUp Health said.

In ranked order, the functions that attracted the most funding from January through June, according to StartUp Health, were: 

  1. Patient empowerment
  2. Clinical workflow
  3. Biometric data acquisition
  4. Administrative workflow
  5. Wellness
  6. Research
  7. Personalized health
  8. Population health
  9. Insurance
  10. Education and content 

Rock Health released the second report on July 6, and you can download it here. The San Francisco-based digital health venture capital firm said digital health tech companies attracted a record $5.4 billion in venture capital during the first six months of this year. That beats the previous record of $4.2 billion in venture capital funding set during the first six months of last year. 

“Investors came roaring back into digital health in May as several regulatory and reimbursement barriers to digital health adoption were brushed aside in a rush to keep healthcare systems operational in the midst of the pandemic,” Rock Health said.

In ranked order, the type of digital health technologies or use cases that attracted the most funding from January through June this year, according to the Rock Health report, were:

  1. On-demand healthcare services
  2. Monitoring of disease
  3. Treatment of disease
  4. Fitness and wellness
  5. Non-clinical workflow
  6. Consumer health information
  7. Research and development catalyst
  8. Diagnosis of disease

Rock Health also noted that digital health tech that targeted behavioral health attracted a combined $588 million in venture capital during the first six months of 2020. That’s more than the $539 million in funding that behavioral health digital tech attracted in all of 2019.

The Mercom Capital Group released the third report on July 13, and you can download it here. The integrated research, communications and media firm based in Austin, Texas, said venture capital funding of digital health technology companies reached a record $6.3 billion during the first half of 2020, a nearly 24 percent jump from $5.1 billion that the firm counted during the first half of 2019.

In ranked order, the top categories attracting funding from January through June, according to Mercom, were:

  1. Telemedicine
  2. Analytics
  3. Mobile health apps
  4. Clinical decision support
  5. Healthcare booking (scheduling)
  6. Wearable sensors
  7. Wellness

“Seen as a solution to many of the health challenges resulting from the COVID-19 pandemic, several digital health technologies and services have gone mainstream,” Mercom said. “Investors have noticed the potential.”

You know who didn’t notice? Yours truly.  

What’s going to happen during the final six months of the year? Ask the smart people where they’re placing their bets.

I’ll just wait for the year-end reports from StartUp Health, Rock Health and the Mercom Capital Group and tell you about it.

Thanks for reading.

Stay home, stay safe, stay alive.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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