Symposium Synopsis #3: In Digital Health, the Small Are Getting Smarter

Since the passage of the Affordable Care Act we’ve seen an explosion in digital health funding. 2017 was a record-breaking year at $5.8 billion (up from $1.1 billion in 2011). With so much cash flowing into digital health and 1,000+ start-ups working on transforming different aspects of the healthcare system, you might expect more of the same in the foreseeable future. “Maybe not,” says Mercer’s lead Innovation Imagineer with Mercer LABS, Chris Chan.

At our recent Innovation Symposiums, Chan told attendees the bar to receive funding and prove viability is getting higher. This isn’t terribly surprising given many startups fail in the first four years.

What can you expect in 2020 and beyond? It’s hard to tell, but when funding has peaked in other industries we’ve seen true winners emerge that start to acquire competitors and expand into adjacent services. Only time will tell when we’ll hit peak funding and start to see market consolidation, but employers are certainly feeling fatigued by the overwhelming number of point solutions.

So what can you do in the interim? Chan says to stay nimble. Set up defined evaluation processes of your health vendors. Execute shorter contract terms and negotiate favorable termination provisions. Stay connected with peers outside your organization and talk about good and bad experiences with health vendors. And follow the money—know where investors are placing their bets. What did they bet on last year? In 2017, the top five funded value propositions were: consumer health information, clinical decision support and precision medicine, fitness and wellness, monitoring of disease, and diagnosis of disease.

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