A lot of money has flowed into the digital health industry over the last seven years—$23.8 billion to be exact.
But Rock Health, the venture capital firm that tracks funding across the industry, wants to shift the discussion about health startups from dollars and cents to human beings.
Most technology startups in the consumer world measure value based on online advertising or revenue to investors. But monetary figures associated with digital health companies are “not a metric of success,” according to Bill Evans, CEO and managing director of Rock Health.
“[Venture capital] is a measure of belief and potential within the industry, and that’s valid,” he told FierceHealthcare. “It’s useful to understand where folks are investing money, but it’s not a measure of the actual impact.”
This week, Rock Health launched The Impact Project to fill a void they saw in the discussion about new digital tools in healthcare. The ongoing initiative highlights stories of people that have experienced the real effects of health technology. One initial story features a Florida man who benefited from analytics software developed by the Mayo Clinic that identifies the onset of severe sepsis, a deadly infection that relies on early detection and intervention.
“We want to balance the economic, the clinical and the human impact,” Evans said. “When all three come together in a single company or single solution, the effects on the healthcare system are likely to be profound.”
Following a historic year in which investors sunk more than $5.8 billion into digital health companies, Rock Health analysts have said the industry is in the “middle innings” of maturity. Recent efforts by the FDA, including a new precertification pilot program, have added a regulatory tailwind, and interest from consumer tech giants like Apple, Amazon and Google has shed more light on the potential for technology to improve patient care.
But startups are also under pressure to prove their clinical value in an industry that is heavily regulated and notoriously cautious. That often means partnering with payers or providers to test new solutions over a period of time. Previous research from Rock Health found that 85% of digital health startups are engaged in some form of business-to-business models, and 70% said they engaged in a pilot to convert a sale.
Meanwhile, some of the country’s most prominent healthcare systems have launched their own venture capital arms. Late last year, the Cleveland Clinic partnered with two startup accelerators to launch an incubator focused on digital health technology. Similar efforts have been launched at Providence St. Joseph Health and Hackensack Meridian Health.
Ultimately, Evans hopes Rock Health's effort to highlight the human element of innovation will help drive a broader discussion about how new tools ultimately impact the end user.
"The strongest signal of success comes from companies where the human dimension and the economic dimension are equally and deeply emphasized," he said.