By Aman Bhandari
With 2014 halfway behind us, it’s time for a bi-annual look back at digital health innovation so far. What have been our major influencers?
Six months is a very short time span in which to say anything is shaping a sector, but it’s also a good time frame for a snapshot. It wasn’t until I started thinking about what’s happened recently that I realized how dizzying the activity has been across the spectrum and potentially at scale. This is critical. In this year alone we are seeing some of the biggest players make bets and shifts, from the Office of the National Coordinator for Health Information Technology (ONC) to Apple, which means the digital health ecosystem will be impacted, and it could happen at scale.
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First, look at the activity and record levels of venture funding in the digital health space; $700M in Q1 2014 alone, an 87% year over year increase according to Rock Health. This recent Harvard Business Review piece nicely summarizes why the time to be in digital health is now. There has (finally) been some chatter that we are approaching bubble territory in digital health, and while that may be true, there are at least three areas of optimism thanks to the infrastructure and ecosystem evolving at all levels: Continued Federal activity, Fortune 500/Wall Street involvement, and diversified venture funding.
1. Federal Government: Continued Data Liquidity Push
The federal activity from this year is across the board. Some highlights that will challenge entrepreneurs to develop a continued drive for enhanced data and information liquidity with an improved consumer experience over the long run include the following:
- ONC releases 10 year interoperability vision
- ONC re-organizes and creates an API committee. This wouldn’t have happened as recently as two years ago.
- Medicare announces an historic data release of physician payment data revises other data related guidelines, potentially opening more access to commercial entities
- FDA Open Data releases millions of files to entrepreneuers in a more accessible format
- Healthcare.gov helps enroll millions of people
2. Digital Health at Scale: Fortune 500 Involvement
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Following on CMS data transparency efforts, some of the largest health insurers, including Aetna, United Health and Humana, announced they will release payment data to consumers. And speaking of consumers, technology companies including Intel, Samsung, and Apple have entered in a big way, and it’s clear that wearables have gone mainstream. The Fortune 500 are paying attention and are also forming collaborations across silos, such as the Apple Epic and Mayo partnership, including:
- Intel’s $100M+ acquisition of Basis
- Samsung’s $50M digital health fund + S Health launch
- The Apple Health Kit
- Health insurance giants making payment data public
3. Startup Diversification & Investment: New Entrants
The third signal flare from 2014 to watch is the increased diversity of players including some who haven’t been as involved previously. This includes investments this year from venture funds Social+Capital and Andreessen Horowitz (a16z). Some of the new entrants are driving record amounts of funding and are bringing greater assets to bear. Here are some highlights of startup activity:
- Flatiron Health had one of the largest series B rounds in the digital health space ($130M)
- Omada Health gets $28M series B lead by a16z
- Better raises $5M from Social+Capital
- Nant Health receives $100M from the Kuwait Investment Authority
- 16 digital health acquisitions to date
Digital health innovation is still the wild West, admittedly, and there are many hurdles. What’s clear is that these three areas have backing from actors who can scale and bring on the best talent in the world. They’re creating a robust ecosystem that is shaping innovation in digital health. Across the board, there is a larger theme taking shape of capturing, aggregating and democratizing access to data, which is spurring entrepreneurial activity and the consumerization of health. In addition, novel cross-silo partnerships are forming. Collaboration across the health and tech sectors is no longer an option; it is a necessity if we are going to drive meaningful change in healthcare.
Which three things would you point to as harbingers for 2014?
