What is driving digital healthcare startup growth?
By - Digital healthcare, which includes telehealth and wearable technology, is becoming more than just a buzzword if a recent study is to be any indication.
Startup funding for digital healthcare is expected to double in the US over the next three years, growing from $3.5 billion in 2014 to $6.5 billion by the end of 2017, according to a recent Accenture study. The growth in these types of startups will largely be driven by evolving consumer expectations, Accenture explained.
Healthcare is evolving in a way “that will change social interactions, alter consumer expectations and, ultimately, improve health outcomes,” Dipak Patel, managing director of Accenture’s patient access initiatives, said in a statement. “This momentum will be sustained if digital healthcare start-ups apply capabilities that create a seamless patient experience and result in both medical cost savings and improved outcomes.”
For its research Accenture looked at market analysis, project experience, third-party analysis and data from 2,000 digital health start-ups receiving funding between 2008 and 2013. The company explained that pure-play medical devices, bio-tech, consulting/advisory firms and public companies were excluded from the study.
Accenture’s analysis found that an estimated $2.8 billion was used to fund digital health start-ups in 2012, growing at an annual rate of 31 percent since 2008. Moreover, it’s predicted that digital health startup funding will increase to $4.3 billion in 2015 and it is expected to reach $6.5 billion by the end of 2017.
Startup funding will also be fueled by opportunities to “fix” the US healthcare system, Accenture said. Momentum will be sustained as digital health start-ups – and their funding entities – pursue numerous ways to combine SMACS capabilities into a seamless experience that creates medical cost savings and improved health outcomes.
Accenture also explained that patient engagement and experience in healthcare will change in the near future. Because of this, all stakeholders will need new strategies to respond to digital disruption and the effects it could have on patients, health consumers and members.
“Healthcare leaders will need to embrace digital capabilities, not only to stay relevant to consumers, but to influence behavioral change, improve access to care channels and reduce per patient costs,” Patel said. “Organizations need to weave digital capabilities into the core of their business models so technology becomes embedded in everything they do.”
These results seemingly follow a trend toward organizations pushing toward digital healthcare growth. Last year, Rock Health reported that venture capital backers invested more than $1.4 billion in digital health companies in 2012, including $340 million in start-ups focused on the EHR and health consumer engagement fields in 2012. Moreover, 134 companies focused on providing new healthcare services or improving the consumer experience each secured more than $2 million during 2012.
