News Feature | September 30, 2014

Digital Health Funding Expected To Top $6.5 Billion By 2017

Christine Kern

By Christine Kern, contributing writer

Digital Health Funding Growth

Near doubling of funding is expected to produce numerous opportunities for development in digital health.

Digital health funding is expected to nearly double in the next three years – from $3.5 billion in 2014 to $6.5 billion by the end of 2017 – according to new research by Accenture. The forecast is based on market analysis, project experience, third-party analysis, and data from 2,000 digital health start-ups receiving funding between 2008 and 2013.

The U.S. healthcare system is under pressure to provide a more efficient, interoperable, and consumer-friendly experience meaning it must “fix” inefficiencies while at the same time addressing changing consumer expectations. As a result of these forces, funding of digital healthcare start-ups and a new era of industry innovation are beginning to blossom, reflected by the emergence of new technology offerings and business models.

Traditional healthcare organizations and all industry stakeholders alike are taking interest in this shifting marketplace, trying to assess whether this funding momentum will continue, to what extent, and to what market segments. According to Accenture, an estimated $2.8 billion was used to fund digital health start-ups last year, growing at an annual rate of 31 percent since 2008, a rate that is only anticipated to accelerate.

“A digital disruption is playing out in healthcare that will change social interactions, alter consumer expectations and, ultimately, improve health outcomes. 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,” said Dipak Patel, managing director of Accenture’s patient access initiatives in a statement.

Digital Health Funding Market Drivers
The five key drivers sparking business opportunities and digital health funding, according to the Accenture research, are system waste, physical/digital blending, the rise of industry newcomers, new investment models, and social motivation. According to the research, startup funding between 2008 and 2013 totaled $10.2 billion for digital health solutions addressing four market segments:

  • Infrastructure capabilities, such as interoperability and health analytics, accounted for an estimated $2.9 billion in start-up funding, which was used by organizations to comply with industry changes and federal Meaningful Use guidelines.
  • Engagement solutions, such as wearable technology and incentive programs targeting behavioral change among patients, received $2.6 billion in start-up funding.
  • Treatment tools, which enable alternative care channels by leveraging technology, such as telehealth, also received $2.6 billion in start-up funding.
  • Diagnosis technology captured $2.1 billion in start-up funding, representing a rapidly growing segment of clinical and consumer tools, such as remote monitoring, that provides practitioners with real-time insight.

Through 2017, Accenture predicts that stand-out organizations, and their applications, will succeed through the linkage of capabilities across these four segments. Emerging technologies will include clinical applications that meet regulatory approval and solutions with more advanced analytics capabilities (e.g., quantum computing).

“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,” added Patel. “Organizations need to weave digital capabilities into the core of their business models so technology becomes embedded in everything they do.”