Venture capital funding for the healthcare IT industry is on pace to double up last year's totals, according to Mercom Capital Group's most recent report. In the third quarter of 2013 alone, more than 150 deals accounted for $737 million raised in VC funding, while year to date, that total is $1.85 billion.
Raj Prabhu, CEO for the Austin, Texas-based consulting firm, said that initiatives by the federal government--including the Meaningful Use incentive program and the release of healthcare data by the U.S. Department of Health & Human Services--have been key to the industry's financial success, thus far.
"With major parts of the Affordable Care Act on the horizon, the focus is on health insurance exchanges, preventative care, wellness, population health, and a general shift from quantity to quality of care, which is reflected in this quarter's funding transactions," Prabhu said in an announcement touting the report.
A breakdown of the numbers reveals that more than one-third of the Q3 deals--59 of 151--focused on healthcare practice-focused technology companies, which received $489 million. Consumer-focused companies accounted for more overall deals (92), but less money ($248 million). In the top Q3 deal, (which took place on Sept. 30), Arlington, Va.-based population health management company Evolent Health raised $100 million from The Advisory Board Company, UPMC Health Plan and TPG Growth.
VC funding for healthcare IT in Q2 totaled $623 million, according to Mercom. For all of 2012, VC funding totaled $1.2 billion.
Mergers and acquisitions in healthcare IT totaled $108 million in 30 transactions for Q3, according to Mercom; for the year, healthcare IT M&A deals total $1.1 billion in 45 transactions.
Healthcare IT spending will top $34.5 billion in North America in 2014, according to a report released in August by Technology Business Research. The Hampton, N.H.-based research firm attributes the spending to regulatory mandates' demand for modernization of infrastructure to meet new healthcare guidelines, and lays out how the money will be spent.
To learn more:
- read the Mercom announcement