Digital Heath Funding Is on Fire

Digital health funding nearly doubled in the first quarter of 2021 to almost $7.2 billion and 179 deals as compared to the fourth quarter 2020 as per a recent report from Mercom Capital Group.¹ Using another medical device metric, it grew by 100 percent as compared to the first quarter of 2020. Part of this growth was COVID-19-related, with $2 billion invested in telemedicine—a surge driven by lockdowns and hospital delivery of care shifting to treating pandemic patients.

Why This Is Important
Overall, digital health venture funding has grown significantly since 2010 with $6 billion invested in almost 6,000 deals. There is no sector of the medical device industry that will be untouched by digital health over the next decade. The Medi-Vantage teams believe the term “digital health” will fade into the past as digital health components are integrated into every medical device developed for hospital and patient use. So, the question remains, who is doing the investing and into what technologies? The top 11 categories are presented in Table 1 with telemedicine leading the pack followed by a significant investment in mHealth, analytics, and clinical decision support.

Other investments were in healthcare service providers of IT, medical device data systems, revenue cycle management for medical practices, health information exchange technologies, shopping for medical devices, electronic health records, healthcare IT security, healthcare benefits, and social health networks.

Patient- and Practice-Centric
Two broad categories have emerged—patient-centric technologies and practice-centric technologies.

Patient-centric technologies include social health—improving communications between physicians and patients. mHealth has grown in importance in patient-centric technologies as seen by broad investments in apps, sensors, and wireless technologies. The delivery of care is enhanced and augmented by remote monitoring in telemedicine. Prevention management is the development of personal health records, patient engagement tools, wireless, and patient education. Patients can shop for medical devices and schedule care with the shopping applications that have been developed.

In the bucket of practice-centric digital health technology are data storage and transmission, medical records analytics, clinical decision support, and information exchange. On the opposite end of the shopping apps for patients is the ability for physicians to schedule appointments, verify patient visits, and bill and collect payments. Practice-centric service providers are also able to provide education and other tools that are outsourced and can make their practices run more smoothly. (For example, my dentist confirms my appointments through chat-bot texts and email. After confirming three times, I would never dare miss an appointment.) And never forget cybersecurity for health information management protection and to ensure all transactions meet HIPAA standards.

Notable Companies Are Making the Acquisitions
Change Healthcare was a leading independent healthcare technology company developing insights and innovations with the goal to accelerate the transformation of U.S. healthcare through its platform. It has developed an intelligent healthcare platform to rapidly drive innovation that helps reduce costs and improve outcomes through use of a smarter and more integrated system. Change Healthcare was acquired by Optum Corporation for $1.3 billion.

Preventice Solutions was acquired by Boston Scientific Corp. for $925 million. They make cardiac monitors and EMR integration tools, and provide clinical research. They also supply the Beatlogic artificial intelligence tool—which tracks and validates irregular heartbeats and provides machine learning for the detection of atrial fibrillation, and deep learning for ECG annotation. This is a great fit for the Boston Scientific portfolio of products for electrophysiologists and patients who suffer from irregular heartbeat. It allows the company to work on the front end of electrophysiology practices as well as to provide medical devices for electrophysiology procedures. As a strategy, this allows Boston Scientific to rise above the commoditization of pacemakers and other electrophysiology medical devices to provide more value to the critically important electrophysiologist medical specialty.

Capsule was acquired by Philips for $635 million. Capsule plays in the bare-knuckles-fighting market of electronic medical records against Epic and Cerner. This acquisition will allow Phillips to leverage its monitoring technologies into this space. It’s a similar strategy to the aforementioned Boston Scientific strategy. Develop your portfolio to be broader than any competitor to provide a series of tools where no one can compete. Like many electrophysiology tools referenced, patient monitors have become a commodity. This acquisition positions Philips against other monitoring companies like Siemens and Drager.

PatientPing was acquired by Appriss Health—an up-and-coming company that provides solutions to help identify, prevent, and manage substance-use disorders. PatientPing provides real time notifications when patients receive care, critical content (and context) at the point of care, context written at the patient level to inform care decisions (such as those in informed consent) and real time performance dashboards to analyze trends. In addition, PatientPing provides hands-on product launch assistance to enable the medical device adoption process. They have developed three product adoption processes,² which, paired with their onboarding support team, ensure early success and lasting engagement to integrate products into patient and provider workflows. The three product adoption processes are:

• TechLaunch—an onboarding experience where providers and patients are trained on PatientPing to familiarize themselves with the interface and get up and running quickly.
• QuickLaunch—an individualized medical device product launch approach that matches support to the needs of the medical device team.
• GuidedLaunch—a customized program that meets the needs of the medical device company, the patient, and provider, and accelerates impact at launch.

Accolade boasts it provides a better human experience through quality interactions and secure, timely access to personal health data. Accolade health assistants and nurses get to know each patient in their system, understand what matters to them, and make recommendations based on their unique health needs to navigate patients to the resources that can help them the most at the most efficient cost. They acquired 2nd.MD, a company that connects patients with board-certified, leading doctors across the country for an expert second opinion via video or phone within three to five days. Their CareTeam coordinates all the details, so patients can focus on getting the best care possible.

The Medi-Vantage Perspective
Understanding acquisitions in the digital health space means you must first identify the clinical workflow for patients and for providers. Clinical workflow is the detail that surrounds every specialty that must inform your product development strategy and will assure your team this digital health component has the best fit with that device. Careful voice of the customer research provides the details of clinical workflow and identifies if the company being investigated for acquisition meets all the due diligence requirements of the acquiring company. 

References

1. bit.ly/mpo210701
2. bit.ly/mpo210702

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Maria Shepherd has more than 20 years of leadership experience in medical device/life-science marketing in small startups and top-tier companies. After her industry career, including her role as vice president of marketing for Oridion Medical, where she boosted the company valuation prior to its acquisition by Medtronic, director of marketing for Philips Medical, and senior management roles at Boston Scientific Corp., she founded Medi-Vantage. Medi-Vantage provides marketing and business strategy and innovation research for the medical device industry. The firm quantitatively and qualitatively sizes and segments opportunities, evaluates new technologies, provides marketing services, and assesses prospective acquisitions. Shepherd has taught marketing and product development courses, speaks regularly at medtech conferences, and can be reached at [email protected]. Visit her website at www.medi-vantage.com.