Digital health is the new new thing. Like all new things, it is surrounding by hype and hope. Be careful out there.
Digital health technologies, those that apply information and communications technologies to improve care outcomes, reduce per capita costs and improve the patient experience, continue to hit the market with breakneck speed. Investors like the space, putting $3-5 billion so far this year to work in the sector, which is almost double the investment amount compared to this time last year. Digital health means different things to different people. Here's how I slice and dice the industy:
1. Remote sensing and wearables
3. Data analytics and intelligence, predictive modeling
4. Health and wellness behavior modification tools
5. Bioinformatics tools (-omics)
6. Medical social media
7. Digitized health record platforms
8. Patient-physician patient portals
9. DIY diagnostics, compliance and treatments
10. Decision support systems
If you are thinking about investing in the digital health industry, keep a few things in mind:
1. There is a difference between an industry and a market. Those companies that provide products and services comprise the industry. The customers who use those products and are looking for ways to get a particular job done are the market.
2. Like all investors, digital health investors are looking for the highest rate of return with the least amount of risk. Given the foggy legal, regulatory and reimbursement atmosphere, it's too early to tell which dogs will eat the food.
3. Most digital health technologies have not been clinically validated.
4. The Food and Drug Administration (FDA) continues to offer periodic guidance documents and regulations that contribute to a level of uncerainty that makes the hair stand up on the back of investor's necks.
5. Given the multiple stakeholders in healthcare, like payers, providers, patients, partners, and others, it's hard to target any one customer. Several need to see the value for any given product or service.
6. The industry is too new and there is too little research to know which customers/patients/stakeholders will adopt a product and why.
7. Scale trumps innovation. The single most important characteristic of those companies that have received substantial follow-on investments are those that have scaled their customer rate rapidly by at least 70% a year.
8. Doctors don't have the information they need to know whether to prescribe or use a given digital health technology
9. Most doctors don't get paid to use digital health technologies, they disrupt workflow and there are nagging behavioral and emotional barriers to adoption by both patients and their families and their doctors.
10. There are significant confidentiality, security and data privacy issues still lurking.
Digital health is the new new thing. Like all new things, it is surrounded by hype and hope. Whether digital health can bend the cost curve or is just another tech bubble remains to be seen. Digital health investors need to do their due diligence with both eyes open and their wallets closed until their risk hurdles are met. Caveat Digemptor.
This blog first appeared at http://www.sopenet.org