Rise of Digital Healthcare: 5 Drivers

Digital healthcare is no longer a novelty or an experiment. It is a fresh industry attracting not only significant new players and consumers but, most significant, investors – the key to continuous adoption and growth.

Five years ago, venture capital investing in digital healthcare in 2011 equaled less than $1 billion. Two years later, it more than doubled, to $1.9 billion. Then along came 2014, when funding more than doubled again, to $4.3 billion, followed by yet another record—$4.5 billion—in 2015, according to Rock Health, the first venture fund dedicated to digital health

Digital health is a solution for a U.S. healthcare system that struggles with high costs and inefficiencies despite its world-class physicians and medical technology.

Though, how big is this market? It's a $32 billion market (Goldman Sachs).

Among the initiatives are companies offering digital solutions with therapeutic impact, support healthy behaviors and finally prevent the onset of chronic diseases.

Two pioneering companies in the chronic conditions market are HealthReveal and Omada Health. HealthReveal analyzes the health of at-risk patients through a cloud-based, digital health solution and intervenes with diagnostic and treatment guidance to empower patients. Omada Health has adopted related strategy, which identifies employees most at risk for chronic conditions and sends them a wireless digital scale, pedometer and exercise bands. They also pair each participant with a personal health coach and online peer support group.

Other enticing opportunities include the development of consumer digital tools to help manage mental health conditions.

One each five of us is living with a mental health condition, like depression and anxiety. These conditions are the leading cause of loss of quality life and productivity in the US.

Smartphones can easily provide continuous measures of a patient’s mood and behavior, and can be used to deliver treatments too. Among the digital mental health care players are Lantern, a mental health startup that offers tools to deal with stress, anxiety and body image that raised a $17 million Series A round led by the University of Pittsburgh Medical Center’s venture arm with participation from previous investors such as Mayfield and SoftTechVC.

Ginger.io, another digital mental health solution, have raised $20 million in financing to accelerate the development and expansion of its healthcare technology platform. The Series B funding round saw participation from Ginger.io Series A investors Khosla Ventures and True Ventures.

Youper is a mobile platform for patients to self-manage mental health conditions, generating clinical outcomes for consumers while reducing healthcare utilization and costs for health insurances companies.

The Youper's approach is to address each condition starting by empowering the patient and integrating the care.

This way, the patients find help earlier, start improving their mental health using self-management tools, and engage better with healthcare providers, improving outcomes from psychological and biological treatments.

Why are these opportunities arising?

Here are five drivers:

1. Mobile technology

The widespread adoption of smartphones, easy-to-use wearable and implantable devices can now provide actionable data and real interactions.

2. Engaged patients and pro-active providers

Physicians, hospital managers, and patients engage more with each other more than before, sometimes through smartphone apps or remote technologies to track data and tweak treatments.

3. Increasing awareness of the value of digital health

The HITECH Act leveraged the implementation of electronic health records. EHR data provides digital health players with a deep storehouse of clinical data for mining for analytical insight and patient health updates. The CONNECT Act is doing the same to expand the use of digital health (or telemedicine) within Medicare. The CONNECT Act includes many provisions with this goal in mind.

4. Value-based medicine

To focus on healthcare outcomes, not procedures, and pressures the healthcare system to deliver higher-quality care at lower costs.

5. Large companies are embracing digital healthcare technology

Companies such as Oracle, IBM, and Philips see the growth of digital technology helping their businesses.

Digital healthcare has started to transform healthcare by making prevention, diagnosis and treatment broadly accessible while reducing the costs.

The changes so far are moderately immature and will take years to spread widely. But they have arrived and will inevitably grow.