Digital Health Funding Hits $3B MarkDigital Health Funding Hits $3B Mark

The third quarter numbers for 2014 are in and digital health funding has risen to over $3 billion, up from the $2.3 billion figure reported at the same time last year. According to a report from digital health incubator Rock Health, total 2014 dollars raised has steadily increased through the third quarter, indicating that digital health funding will continue to rise to meet market demands.

StartUp Health, a similar organization to Rock Health, also tracks digital health investment. StartUP Health claims digital health funding has already reached $5 billion this year. As MobiHealth News notes, the $2 billion disparity between their total and Rock Health's is puzzling. In the comment section of that site, Malay Gandhi, managing director at Rock Health notes: "This $2B overstatement is almost entirely (i.e., >75%) related to non-venture financings and non-technology companies being included in the dollars."

In any case, digital health startups are awash with cash, as investment dollars continue to migrate toward reducing costs and improving patient outcomes.

One of the fastest growing digital health funding categories has been digital therapies. Digital therapies include any hardware or software platforms designed to deliver a specific clinical outcome in therapeutic areas.

The continued upward trend of investment could explain Google's increasing reach into healthcare, as well as Facebook's recent announcement of its intent to get in on the action as well. The third quarter also saw several major acquisitions, as new partnerships formed in the medtech market.

Cognizant Technology Solutions Corp acquired TriZetto, a company that develops core administration solutions between healthcare providers and patients. The hope is that Cognizant will be able to help providers streamline processes, and improve the cost and quality of care between providers and patients. HCA also acquired PatientKeeper, a provider of software and mobile applications that can help physicians access patient information more efficiently.

Even Google jumped in on the action, as they acquired Lift Labs, a company that specializes in the design of a high-tech spoon that reduces tremor, making it easier for people with neurodegenerative tremors to eat. The team joined Google X, the semi-secret facility run by Google where previous products such as Google Glass, Google's self-driving car, and the Google Contact Lens project were all developed. Future plans include developing additional tools that can be used to alleviate the issues involved with neurological tremors.

The top three deals this quarter all topped out near the $50-million mark, as the investments came from both sides of the country. California continues to dominate the digital-health funding realm, representing 37% of all funding dollars to date this year, followed by New York and Massachusetts.

Despite the exponential growth of investment over the past 18 months or so, logic would suggest that the figures will begin to peak relatively soon, although a few spikes could still be seen as innovative technology continues to extend its reach into our daily lives.

So far the total investment amount has already more than doubled the total from 2013, with fourth quarter numbers still in progress. As investments continue to rise, experts are optimistic that 2014 will finish off strong, as investors continue to look to provide new digital health companies that can have a lasting impact on the healthcare market, helping reduce costs and improve the overall quality of care. 

Kristopher Sturgis is a contributor to Qmed and MPMN.

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