Funding for digital health companies in 2020 nearly doubled over the previous year and the investments recorded in Q1 of 2021 were more than five times what they were in Q1 of 2020. While many venture capital firms see a bubble developing in the tech sector, they are firmly optimistic that the post-pandemic era will see multiyear growth for digital health.
This rise in funding is largely in response to the rapid acceleration of technology adoption in the health care sector due to the COVID-19 pandemic. In addition, health care-backed corporate venture capital firms (CVCs)—whose investments grew by 68% in 2020—are acquiring digital health companies to speed their time to market and round out their offerings. And in 2020, a record number of digital health companies went public either through special purpose acquisition companies (SPACs) or initial public offerings (IPOs). Many experts believe that the volume of M&A deals—such as the Teledoc-Livongo merger—will also continue to increase at the same rate as the expansion of the public market, due to the consolidation of point solution companies as well as acquisitions by large tech and health care companies who are looking to diversify their revenue.
With all of the momentum in this space, the future looks especially bright for continued innovation on well-being and care delivery models—specifically, companies that are focused on improving remote patient monitoring and increasing access to care, which received a record $6.4 billion in 2020, nearly half of all digital health funding for the year. However, without key changes in policy, privacy and access to care, the adoption and expansion of these digital health services may be limited. Following is an overview of what is needed to actualize the full potential of the digital health revolution.
Policy. Innovation in technology often requires innovation in policymaking to capitalize on the benefits and mitigate the risks. In the face of an unprecedented need for virtual care during the COVID-19 pandemic, the Centers for Medicare and Medicaid Services (CMS) relaxed its regulations for telehealth services and added telehealth visits as a covered benefit. And the World Health Organization created the Resolution on Digital Health to encourage member countries to examine their own policies to make sure they were conducive to the development, growth and adoption of digital health technology.
However, the medical community has vocalized concern about the impact of unregulated digital health apps that may not be providing clinically accurate data and recommendations to consumers. Health care policy experts are now advocating for regulations that aim to improve a user-centered approach in four key areas: accuracy, usability, accessibility, and privacy. While the FDA has established a Digital Health Software Precertification (Pre-Cert) Program to provide oversight of digital health app development and verify their safety, we expect to see the roll out of more programs like these in the coming years.
Privacy. Advances in genome sequencing and new research on the role of the microbiome in the development and treatment of chronic diseases is helping to realize the promise of precision health—a term that is based on personalized medicine, but includes a broader set of approaches such as digital therapeutics and wearables. Through data collection methods such as at-home DNA testing and continuous glucose monitors (CGMs) consumers now have the power to “hack” their own health in new ways. AI-powered apps are making this personalized data actionable and suggesting real-time interventions to users that help them optimize their health. For example, a new category of digital health companies are expanding access to CGMs so people can monitor and maintain healthy glucose levels in an effort to increase athletic performance, eat healthier and lose weight.
But this raises a whole host of new privacy issues that need to be considered as more specific health data becomes trackable. In the United States, the data collected through digital health apps not affiliated with an insurance company or health care provider may not always be subject to the same consumer protections under the Health Insurance Portability and Accountability Act (HIPAA) as data collected inside a doctor’s office. One fertility tracking app, for example, was investigated by the FTC for sharing sensitive personal health data with advertisers. Several consumer privacy bills have been introduced in Congress to address this issue, including the Protecting Personal Health Data Act sponsored by Senator Amy Klobuchar (D-MN), which should come up for a vote this year.
Access. Just as the expansion of telehealth due to the COVID-19 pandemic is increasing access to health care, digital health apps and wearables are enabling clinicians to monitor their patients remotely, especially those suffering from chronic diseases such as diabetes and heart disease. Many of these apps are replacing the need for in-office visits and expensive medical devices. For example, a new app called Biospectal, uses a smartphone camera to monitor blood pressure by measuring the blood flow through your fingertip, eliminating the need to go to the doctor or purchase an at-home blood pressure cuff.
But access to this technology and its health benefits is still limited to fairly affluent populations and further restricted by access to broadband. Marginalized communities in affluent countries – including rural, LGBTQ and communities of color – also have unique challenges in accessing healthcare which can be overcome with digital solutions. While broadband penetration is high in the developed world, and more than 80% of the developing world have smartphones, 49% of the globe still does not have access to a broadband connection, according to the ITU/UNESCO Broadband Commission for Sustainable Development. This is particularly worrisome for women in developing countries in the Middle East, Far East and Africa where the digital divide is even more pronounced. One of the key directives of the World Health Organizations’ resolution WHA71.1 is for member states to invest in digital health technologies “as a means of promoting equitable, affordable and universal access to health for all.” While high smartphone penetration provides some hope, in order to fully realize this mission, governments need to collaborate with communications providers to continue to build out broadband infrastructure so both women and men from marginalized communities and developing countries can have the same access as the developed world. Once this infrastructure is in place, it presents an opportunity for additional private sector investment and growth in digital health companies in the developing world, which can have huge implications for how the growing number of people who live in poverty receive healthcare.
The future of digital health continues to look bright, as long as policy makers, privacy experts and the private sector can work together to address key issues that limit its potential impact on those that need it most. Making these efforts, and their success, known to the public and other key stakeholders will also be a crucial part of the equation.
Kelly Chrystal and Stephanie Green contributed to this article.