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Digital Health Funding Expected to Top $6.5 Billion by 2017

11 Dec 2014 by Christine Kern

Digital health funding is expected to double in the United States over the next three years, growing 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.

Rate is only anticipated to accelerate

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.

Aging population & advances in clinical treatment tech will require new delivery systems

A similar report by the Insight Research Corporation concluded, “In the US, the $3 trillion ecosystem of hospitals, physicians, pharmaceutical companies, and insurance providers that make up the healthcare industry will be spending over $100 billion between now and 2017 on telecommunications services and equipment.” The report went on to state, “The compound effect of an aging population and advances in clinical treatment technologies will require new healthcare delivery systems that can synthesize diagnostic data, provide immediate clinical recommendations, and build a repository of healthcare information that will advance future treatments.”

The Insight study examines the transformation of global healthcare information technology, trends in provider care and forces that shape this massive industry. Surveying a number of hospitals and care providers, the report makes recommendations for telecom service providers, equipment manufacturers and systems integrators who address this industry. It also identifies key demographic and technology drivers that will shape this transformation, and provides five-year revenue and unit forecasts for hardware and network services, by healthcare segment and by technology.

The five key drivers

The five key drivers sparking business opportunities and digital health funding, according to the Accenture research, are:

  1. System waste
  2. Physical/digital blending
  3. The rise of industry newcomers
  4. New investment models
  5. Social motivation

Start-up funding addressed four specific market segments

According to the research, start-up funding between 2008 and 2013 totaled $10.2 billion for digital health solutions, and addressed four specific market segments:

  1. Infrastructure capabilities including interoperability and health analytics saw approximately $2.9 billion in start-up funding used to comply with industry changes and federal Meaningful Use guidelines.
  2. Engagement solutions received $2.6 billion in start-up funding for wearable technology and incentive programs targeting behavioral change among patients.
  3. Treatment tools received $2.6 billion in start-up funding, leveraging technology such as telehealth to enable alternative care practices.
  4. Diagnosis technology captured $2.1 billion in start-up funding, representing a rapidly growing segment of clinical and consumer tools such as remote monitoring, which provides practitioners with real-time insight.

Organizations will flourish as a result of integration across these four segments

Through 2017, Accenture predicts that successful organizations, and their applications, will flourish as a result of integration 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.”