Digital health is booming as an industry. But healthcare entrepreneurs and medical professionals shouldn't forget these key rules of the game.
The digital health industry is maturing and, some think, is getting frothy and saturated.
At the midyear point, digital health venture funding in 2015 was on pace with 2014, the largest year for funding to date. Now three-quarters into 2015, venture investments have outpaced 2014’s three-quarter total with funding reaching $3.3 billion, representing 30% Trailing Twelve Month (TTM) growth. The average deal size is the largest yet at $15.8 million, although deal count is down 9% compared to last year. The top eight deals of the quarter contributed to more than 50% of the quarter’s transaction value.
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. Digital health means different things to different people. Here's how I slice and dice the industry:
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 an investor or digipreneur, here are my 10 Commandments of Digital Health:
1. Thou shalt not be obsessed with short term cash flow. As noted by Peter Thiel in Zero to One, the value of a business today is the sum of all the money it will make in the future. That requires building a long-term monopoly with proprietary technology, a big networking effect, using economies of scale, and branding.
2. Thou shalt not think that Sick Care is like every other consumer industry or just like every other heavily regulated industry. Sick Care is different. What's at stake is different. Patients are different and we are just getting around to figuring out how when it comes to giving them the power to make purchasing and technology adoption decisions.
3. Thou shalt not ignore doctors. Most consider them hapless, powerless, terrible business people who are too busy and self-centered to respond to a big world of change. Don't forget, when all is said and done, investors, administrators, payers, and hospitals don't take care of you. Doctors and other health professionals do and they will bite you if you don't remember that.
4. Thou shalt not start taking care of patients until you learn the basic anatomy and physiology of digital health and the perils of DIY medicine.
5. Thou shalt not assume that doctors are eager to use digital health products and services. There are big gaps in their education, training and understanding.
6. Thou shalt not create mobile medical apps that don't do what they are supposed to do. There are over 165,000 apps and growing exponentially, but only and handful have been clinically validated.
7. Thou shalt not call every product disruptive. Most are not, but, instead, they are me too things that don't add enough value when compared to competitive offerings to be called innovative, let alone disruptive in the original sense of the term.
8. Thou shalt not forget high touch. There are two basic industries — high tech and high touch. Don't make the sin of dismissing the role of doctors as our "healthcare systems" migrate from Sick Care to well care.
9. Thou shalt not think that the present generation of EMRs will lower costs. That will take a whole product solution, not disconnected stacked apps vying for shelf space.
10. Thou shalt not think that most patients are willing and able to take care of themselves using eCare solutions. A small percentage of those who want to are doing so already. The 20% accounting for 80% of the spending are most likely not interested and we don't know enough about human behavior change to navigate the last mile to get to them.
Moses came down from the mountain with two tablets. Just because everyone now has their own tablet, don't make the mistake of thinking that everyone will obey the commandments any more than they did the ones from Mt. Sinai.