This year’s hot topics and buzz will likely be around data analytics, artificial intelligence, virtual and augmented reality, and blockchain, among others. There is widespread recognition that turning massive health data into instant, actionable intelligence will be a huge market on both the practice and consumer sides.
This trend is backed by money flow; data analytics-related companies have received close to $1.4 billion since 2010 with almost $600 million coming in last year alone. It is the fourth largest funded technology group behind mobile health apps, wearables, and telemedicine, according to our data. There were 19 health data analytics companies acquired in 2016, led by the $2.6 billion IBM – Truven Health Analytics deal.
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However, the digital health sector has a tendency of getting ahead of itself with the buzzwords of the year continuously changing whether the problem is solved or not. Investors do not want to miss out and keep pouring money in – last year $5 billion was funded by more than 1,000 investors, including hundreds of CEOs and celebrities.
It is time that the healthcare industry focused on the not-so-sexy topics that are integral to the growth of the digital health sector. Is the problem of interoperability solved? Without health record systems talking to each other, it is difficult to see other solutions takeoff. How about security and privacy? More than 16 million patient records were breached in 2016, 81 percent of those from hacks, according to Redspin’s annual cybersecurity report. There was a 320 percent increase in hacking of healthcare providers year-over-year, but only $45 million went to security-related companies last year.
The least sexy topic of all, doctor-patient interaction where all of the digital health solutions come together to make the experience efficient, productive and insightful, has had an opposite effect according to two studies over the last year. Doctors spend twice and thrice the amount of time in front of computers than with patients, according to these reports. Will the sector come up with solutions to fix this?
After seeing funding growth explode from 2011 to 2014, it has begun to slow down and digital health companies that did have IPOs have struggled. In 2016, the top money-getters in digital health were mobile health apps, wearables, data analytics, and telemedicine. It will be interesting to see if there is a correlation between the hot topics this year and where the money is going.
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For the sector to get to the next level, companies need to start making money and convince consumers, retail investors and Wall Street the value and true potential of the sector. Discussions on “how” should start now.
Photo: Bigstock
Raj Prabhu is CEO and Co-founder of Mercom Capital Group, a research and communications firm focused on healthcare IT and cleantech markets. Mercom publishes weekly market intelligence and quarterly funding and M&A reports on the Healthcare IT/Digital Health sector. The company also provides custom research and communication programs along with funding and M&A strategies.
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