Despite regulatory uncertainty, digital health investment remains steady

For an industry traditionally scrutinized for low executive pay, one has to wonder what our executives are actually making.
Uncertainty in D.C. didn't slow investments in digital health companies, particularly those specializing in data analytics.

Regulatory uncertainty has led some payers and providers to delay health IT investments, but that cautious perspective hasn’t been pervasive enough to discourage investment in digital health companies.

The first quarter of 2017 saw 71 digital health deals with funding reaching $1 billion, according to a report by Rock Health. That dollar figure lands directly between first-quarter funding totals in 2015 and 2016.

Data analytics generated the most attention from investors, with 11 deals totaling nearly $200 million. A big portion of that funding was tied to Nuna, a San Francisco startup that burst on the scene by providing the Medicaid program a “near historic” cloud-based update.

The steady growth surprised some venture capitalists, who expected to see digital health investments slow down as Congress sought to repeal the ACA and plug in a Republican-led healthcare reboot. While some noted that a few health systems tightened their purse strings on any major technology investments until there was more regulatory clarity, others pointed out that patient engagement and value-based care are likely to remain a priority regardless of any federal changes.

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Engagement and evidence were common themes among more than 100 digital health CEOs who spoke to Rock Health during the company’s annual Digital Health CEO Summit. Industry leaders also noted that consumerism is driving industry growth, but companies should still expect far slower growth compared to their consumer counterparts.

In December, a survey published by Rock Health showed that more than half of consumers used three or more digital health tools in 2016, up from 19% the year before.

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Perhaps in light of the uncertainty hanging over D.C., Lucia Savage, former chief privacy officer at the Office of the National Coordinator for Health IT (ONC) and current chief privacy and regulatory officer at Omada Health, urged companies to “pay attention to the regulatory space” and interact with officials at CMS, HHS, and ONC.

“Measuring [meaningful use] and paying for what you measure are not going away,” she added.