Electronic Health Records

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mHealth funding up 12% this year, says Rock Health report

By Jennifer Bresnick

Investments in digital health are 12% higher than this time last year, says a mid-year report by Rock Health, although the pace of acceleration is somewhat slower than it was in 2012.  Ninety digital health companies have each raised $2 million so far in 2013, with overall investment approaching $850 million in the first six months of the year.  Much of this venture capital money is being poured into remote patient monitoring, EHR improvements, and patient-facing wellness apps and devices, continuing the trend of incorporating digital innovations into the clinical workflow.

Big venture capital firms are doling out the money to more established entrepreneurs, however, and the lack of seed funding is prompting start-ups to turn to the popular crowd-sourcing method of raising capital.  Indiegogo, a crowd-sourcing network, saw an astonishing 2779% increase in the number of health campaigns in 2013, and at least four healthcare-specific sites have cropped up recently, as well.  Among the most successful crowd-sourced campaigns are personal health tracking devices, including fitness bracelets, a workout shirt that tracks heat output, and an iPhone-connected fork that encourages slower eating for better digestion and portion control.

In addition to start-ups with mHealth ideas, established EHR vendors are acquiring smaller companies rapidly to increase their portfolio of mobile solutions.  Allscripts, athenahealth, Cerner, and Practice Fusion have all made purchases this year, including patient engagement and employee wellness programs, and a personalized health prediction platform.

Investment in digital health is likely to continue to increase over the next few years, as physicians continue to demand mobile versions of their EHR software.  In a recent Black Book survey, 100% of hospitalists and 98% of primary care physicians expressed a strong preference for digital health software with mobile capabilities.  With bigger vendors turning to start-ups for innovative ideas in the mobile space, providers can likely expect a proliferation of inventive on-the-go solutions with the backing of companies they know and trust.

The slightly slower rate of growth may be due to the long-awaited governance due from the Food and Drug Administration (FDA) on mHealth regulation, slated to be released sometime this year, but delayed since 2011.  Investors and developers have been holding off on making big decisions without knowing whether their mHealth products will fall under the agency’s jurisdiction or not.

“It is incredibly important for companies to understand if their app will not be regulated,” states a position paper from the mHealth Regulatory Commission, begging the FDA to make a final ruling. “Right now, many companies are sitting on the sidelines and not developing higher risk apps because the rules are unclear.”  The FDA has promised to release final guidance by the end of fiscal year 2013, which will undoubtedly change the trajectory of venture capital investment, one way or the other.





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