Screen Shot 2014-10-03 at 1.56.07 AMMany clinicians have probably noticed a flood of announcements about new health devices entering the market, companies with algorithms that will crunch billions of health data points, and apps that will transform the way we manage some major chronic disease.

A flood of money is driving that explosive growth from investors into the digital health space. And a report released today from StartUp Health gives us some insights into just how big that flood is.

For most clinicians, it will never matter that digital health startup X got millions on dollars in seed funding; many of them will disappear in the coming years as the market matures.

There are however some points worth noting about the broader trends highlighted by this report, insights about how we can expect the practice of medicine to be impacted in the coming years.

  • Big data and analytics garnered by far the largest investment, with startups raking in a combined $1.2bn. Startups that focusing on process improvement, such as navigating the care system or practice management, raked in a combined $1.4bn. There’s clearly a recognition that the inner workings of the healthcare system are in need of a dramatic overhaul. Hopefully, these investments will translate into a more lean healthcare system where the incomprehensible inefficiencies caused by data fragmentation and horribly inefficient management processes become a thing of the past.
  • The pace of acquisitions of smaller startups is increasing. In addition, the number of startups garnering investments is shrinking while the size of investments is going up. While the cause is multifactorial, Startup Health suggests that investors are raising the bar for what the products/services being advanced in the market and that competition is increasing. Both would be indicators of a maturing market and hopefully a higher standard for products that do enter the market.

The trends noted in this report hopefully indicate that we will see higher quality products and services targeted at practical needs, with more evidence supporting their value as the bar rises for investment.

However, that a company receives millions of dollars from investors simply indicates that someone sees a market opportunity to earn a return on that investment. As clinicians, it’s important that we continue to demand that digital health companies establish an evidence base to back their products, particularly for clinical interventions.