If market conditions continue where they left off in 2014, then 2015 could be another record-breaking year for venture capital funding in the health IT sector. With VC money pouring into HIT, it has become the bellwether surpassing the growth of traditional healthcare and technology alike.
According to a report from StartUp Health, 2014 was a record year for digital health with $6.5 billion investeda 125 percent increase from the total amount in 2013while preliminary estimates by Mercom Capital Group show that VC funding of health IT doubled in 2014, ending up at more than $4.4 billion versus $2.2 billion in 2013.
For its part, Rock Health on Jan. 1 released its Digital Health Funding 2014 Year End report which put the tally of VC money last year at $4.1 billion, nearly the total of all three prior years combined and representing 124 percent year-over-year growth. The firm's funding data only includes disclosed U.S. deals over $2 million.
The top six VC technology categories accounted for 44 percent of all funding in 2014. They include analytics/big data, healthcare consumer engagement, digital medical devices, telemedicine, personalized medicine, and population health management. Telemedicine was the fastest growing category in 2014, which Rock Health predicts will be a mainstay of the top category list as both licensing and reimbursement policies turn favorably towards the sector.
Its worth noting that personalized medicinedefined as software used to support the practice of medicine customized to an individuals geneticsentered the top category list for the very first time this year. Rock Health surmises that the growth in funding for personalized medicine could be attributable to the technological innovations in both genomics and data analysis in recent years. The firm says the other five technology categories continue to see strong funding as a result of the changing healthcare legislative and reimbursement environment.
As we look forward to 2015 and beyond, three categories experienced significant growthand were optimistic about how these digital health companies can help improve care while reducing costs, writes Teresa Wang, strategy manager at Rock Health, in a blog. Telemedicine and digital therapies are redefining what is considered care and how it gets delivered. By leveraging technologies, both healthcare professionals and care treatments can be more widely distributed and accessible to those in need. Moreover, as healthcare reform continues to change the reimbursement environment, payer administration tools will become key to helping stakeholders navigate the healthcare system (and get paid).
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