StartUp Health’s estimation digital health companies have secured $5 billion in funding so far this year is pretty amazing. But some of those investors are taking a bigger chance than others when you consider how diverse these market segments are. An AARP report spotlights nine digital health subsectors and breaks them down from the safest to the riskiest of risk takers. For its part, it sees the total market opportunity worth $30 billion in cumulative revenue over the next five years.
Not surprisingly, physical fitness is deemed the biggest market opportunity at $8.5 billion and relatively low risk. But there are three areas that pose the greatest risk for digital health investors as well as some of the biggest market opportunities.
Social engagement represents the biggest risk with the biggest user base — 57 million. It projects a $1 billion market in five years. The size of the risk might be puzzling considering how many companies are developing digital inclusion tools, especially online patient communities such as myhealthteams, inquisit health and Smart Patients.
When Investment Rhymes with Canada
Canada has a proud history of achievement in the areas of science and technology, and the field of biomanufacturing and life sciences is no exception.
It would seem like online social communities would be perfect for this older group of seniors. With the traditional means for social engagement inconvenient to schedule and manage, it would seem like a no brainer. But these are not really designed for the seniors that need them the most — people in their 70s and 80s who are isolated and alone. Although patient community businesses have demonstrated they can play a positive role, they are typically used alongside the target user’s children or grandchildren who possess the IT literacy necessary to navigate them.
When you have such a diverse group of users using these programs to help someone else, it’s difficult to figure out which company will resonate with them. Startups in this space have found it tough to scale.
The biggest challenge with the diet and nutrition segment is that it’s fragmented. Among the companies identified in this area are platejoy, dash for health and fooducate. Although there are a lot of different approaches to interactive apps such as diet coaches and grocery shopping services that can be ordered online, many of them are pegged to fitness trackers. Although there are plenty of 50-somethings using these devices, it is not so common among 60-somethings and older. But looking ahead, the report forecasts that the market segment will shift to apps that can analyze major and minor ingredients as part of a healthiness assessment. Specialized food and nutrition apps that can guide food choices for shoppers interested in seasonal produce and determine whether it is GMO or not are coming. It predicts the market will grow from $150 million to $600 million by 2019.
Behavioral and emotional health is an interesting area but it has some pretty serious obstacles in front of it. I don’t quite get the way AARP breaks it down, though. Reimbursement by private and public payers is slowly increasing, particularly for telepsychology, but none of those companies are highlighted here. It said the most prevalent solutions, a visit with a psychiatrist, tend to be inconvenient and expensive. Instead it points back to online social communities to make people feel more connected. I am a bit dissatisfied with its rather bleak future projection conclusion that robots like the interactive dog from Gerijoy would provide a decent substitute for a person. Really? From my perspective I’d think it would just add to the feeling of disconnection.
