Health IT Innovation: Past, Present, and Future Trends

10-8-2013 2-39-21 PM

It could easily be argued that health IT is in the midst of a period of proving itself. A point in history where scrappy software programmers are being given an honest opportunity to prove their value in the greater context of medicine and care delivery. One way of looking at how health IT is responding to this opportunity is to take a deeper look at what concepts have attracted the most investment money in years past, that are industry norms now, and what concepts are being heavily invested in today, that should make an appearance in healthcare over the next few years.

To help answer this question, Rock Health publishes an annual digital health funding report. Its Q3 report for 2013 was just released, and the data within it confirms that this year has already established itself as a record breaking fundraising year. Last year the health IT sector brought in $1.4 billion dollars in new investments, a 46 percent jump over 2011’s $890 million total. 2013 has already seen $1.5 billion invested, with another quarter to go before the end of the year.

2011 and 2012: Where the Smart Money Went

10-8-2013 2-24-39 PM

2012 was a year investors focused on EHRs, engaging patients as health consumers, improving health tracking, and the business needs of hospital administration. 2011 and 2012 VC investments have already led to technologies making debuts on the main stage of health IT.

EHRs, driven by Meaningful Use, were heavily funded in 2011 and 2012 and continue to dominate the health IT news as hospitals and practices across the country implement new systems or enhance old ones.

Personal health tracking, a segment that was heavily funded in 2011 and 2012, has started infiltrating enterprise health IT this year.  Epic has unveiled a new API that will begin pulling fitness and health data from activity trackers and medical devices into its EHR, helping to bring quantified data into the exam room. Mainstream consumer electronics manufacturers like Samsung and Apple are also beginning to integrate activity tracking features into the next generation of their devices. All signs pointing toward a more digitally connected health system in the not-to-distant future, driven from investment activity over the past few years.

Engaging patients as consumers was a heavily funded segment in 2012 that is already struggling to keep up with consumer expectations. Commercialized health insurance exchanges developed to support state and federal marketplaces are crumbling under consumer traffic. Meanwhile, startups like ZocDoc that let patients research and compare physicians and practices have also grown into much larger and more established entities in the care delivery space.

2013: Where the New Money’s Going

10-3-2013 10-16-50 PM

In a recent meeting, VentureBeat reporter Christina Farr discusses 2013’s most heavily pursued health IT segments with VCs from powerhouse firms, including: Emergence Capital, Venrock, Kleiner Perkins Caufield & Byers, and Google Ventures.

Telemedicine is a hot area VCs are betting heavily on.  As reimbursement laws are revised, and remote visits are becoming more frequently covered, opportunity exists for startups that can deliver innovative solutions that make remote visits easy, secure, and cost effective.

Remote Patient Monitoring is another sectors that are seeing increased investment activity as VCs look to get in early with health IT companies that have the potential to reduce care delivery costs while helping to maintain quality of life.

Population health and Big Data Analytics tools are also seeing increased investments. Statisticians are working on algorithms designed to provide early alerts for developing conditions within acute populations, and risk profiles for population health management. Population Health startup Evolent Health is leading 2013 with the largest overall investment round at $100 million.

Overall, VCs report that the flood of new investment money in health IT is moving away from core EHR investments and toward peripheral add-ons that either help provider organizations leverage their EHR architecture in a more cost-saving way, or integrate helpful new data sources into the clinical databases that EHRs have established, or simply help hospitals do more with the data they currently have. As last year’s investments convert to established technologies, expect these new investment trends to represent IT budget requisitions in the years to come.

↑ Back to top

Founding Sponsors

Platinum Sponsors