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Paddy Padmanabhan

The FOMO-fueled frenzy of digital health funding

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Monday, April 26, 2021

Issue 111

Forget crypto. If you are desperately trying to unwind your position in Bitcoin and watching Coinbase shares swoon in the aftermath of the IPO, you can always turn to digital health.

VC firm Rock Health’s quarterly report on digital health funding pointed to another blowout performance by digital health startups that are collecting money at a faster pace than ever before. Big VC firms now have dedicated partners focusing on digital health. Money is being thrown out like confetti – and not to mention their close cousin, SPACs – on startups. Party like it’s 1999?

Maybe not. Amidst all the supposedly rational exuberance, it helps to sometimes pay attention to stories that contradict the popular narrative. A survey by Forrester Research among 40 clinicians points to one of the biggest challenges for digital health startups. The study suggests that clinicians have no interest in looking at patient-reported data. In their words, “These products neither promise nor deliver healthcare. Why? They offer data, not answers to consumer questions, diagnoses, or treatment suggestions to help restore one’s health.” The report points to reimbursement uncertainty for many of the solutions built on the data. It concludes with a sobering observation: Consumer technology and data may never play a leading role in helping physicians provide healthcare.

All of this may put a damper on the much-awaited explosion of innovation from the implementation of the CMS interoperability ruling that allows patients to share their data with app developers to build new solutions.

And what does all this mean for digital health companies that have already raised a ton of money and now have to deliver shareholder returns? Throw some of it at acquisitions, of course. Which is what public company Accolade did last week, announcing it is buying Plush Healthcare, a primary care provider with $35 million in revenues, for $450 million in cash, stock, and performance milestones.

The one emerging trend to watch is the expanding digital health strategies of health plans focusing on health care delivery. Indeed, many digital health startups are turning their attention from providers to health plans as potential customers. The announcement of a 10-year JV between Highmark and ChristianaCare in Delaware is also a positive sign of growing cooperation between healthcare payers and providers. Highmark had also signed a multi-year deal recently with Verily platforms. 3-way collaborations between tech, health plans and providers may be what we need more of at this time. Maybe get the employers involved as well.

In my latest podcast episode, I interview David Cohen, Chief Product and Technology Officer at Greenway Health. Take a listen. 

Have a great week.


Podcast of the Week

In this episode, David Cohen, Chief Product and Technology Officer of Greenway Health, highlights the need for RCM service providers to scale up to meet the revenue cycle needs of the larger healthcare practices.

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This Week in Digital Health Markets

We are selectively featuring guest posts in our newsletter from senior leaders in healthcare and technology. Reach out to us if you would like to contribute a blog to one of our upcoming newsletters.

Q1 2021 Funding Report: Digital health is all grown up

Q1 2021 closed with $6.7 billion in US digital health funding, the most-funded quarter to date. The sky is the limit. Rock Health 

Survey casts doubt on utility of wearable devices in healthcare

A new report by Forrester Research on wearables in healthcare concludes such devices assist consumers rather than clinicians, and that their shortcomings are numerous. Healthcare Dive

ChristianaCare, Highmark Health Create Data-Led, Value-Based Care Joint Venture

Two key elements of the 10-year joint venture will be a Solution Design Center and ChristianaCare’s Center for Virtual Health. Healthcare Innovation

Collaboration across the C-suite key to implementing data blocking, interoperability rules

This article talks about the healthcare executives charged with implementing the wide-ranging interoperability and information-blocking regulations. Modern Healthcare  

Anthem, UnitedHealthcare & more: 6 payers expanding digital health strategies

Health insurers including Anthem and UnitedHealthcare are embracing digital health adoption and increasingly growing their respective strategies to engage with members and make care more convenient. Becker’s Hospital Review

Cerner will provide life insurers access to 54M+ patient records via MIB

The deal, the EHR giant’s second recent similar collaboration, aims to improve applicant experience and reduce the amount of time to issue a policy. Healthcare IT News 

Accolade plans to acquire virtual primary care provider PlushCare in a $450M stock and cash deal

Health benefits platform Accolade is expanding into primary care with plans to acquire PlushCare in a deal valued at $450 million. Fierce Healthcare

Dr. Micky Tripathi on interoperability, health equity & how his work with VCs will help him lead the ONC

In a wide-ranging interview, the National Coordinator for Health IT Dr. Micky Tripathi discussed his career and how his varied experiences have expanded his perspective. He also spoke about ONC’s plans for the future, which include “evangelizing” about the opportunities the federal interoperability rules will create for the industry. MedCity News

Note: Some of the articles linked in this newsletter may be behind paywalls that need a subscription.

Chart of the Week

Source: Rock Health


Digital Transformation in Healthcare WHY and WHY NOW

Paddy Padmanabhan presented a session on ‘Digital maturity and digital transformation priorities in U.S. healthcare.’ Session Recording  

Paubox Spring Summit 2021

Paddy Padmanabhan, at the Paubox Spring Summit 2021, moderating a session on “A Uniform Approach to Sharing Assurances and Other Certifications.” Session Recording

Damo Consulting Thought Leadership and Research

NEW WHITE PAPER: Selecting Technology Partners to Execute Digital Strategy – The Damo Consulting ICEA™ Framework

Damo Consulting’s ICEA™ framework guides health systems and technology firms on competitive assessment and partner selection strategies. This paper will help you find out how you can use the framework to categorize the technology vendors and evaluate each vendor within the categories. White Paper

How to optimize health IT systems for immunization drives

The right technology applications can turn the COVID-19 vaccination program into a game-changer for the healthcare industry. Blog

NEW RESEARCH: Digital Transformation Priorities for health systems in a Post COVID-19 Era

Our annual survey on the current state of digital transformation, in collaboration with CHIME, reveals interesting insights on how health systems are prioritizing and funding digital initiatives in a post-COVID-19 era. DamoIntelTM Research 

Assessing Digital Maturity: The DigiMTM Digital Maturity Model for Health Systems

Damo Consulting’s DigiMTM model is a framework that describes the different stages of digital maturity in the specific context of health systems. The framework is supported by an automated online evaluation tool that scores the digital programs of individual health systems and provides benchmarks to drive incremental investments and roadmap execution priorities. White Paper 

Corporate Announcements

Damo Consulting releases annual survey of the state of digital transformation, points to access as the primary focus area for digital health and digital transformation. Virtual visits, automated communications for scheduling and reminders, and patient self-service tools are all high-focus areas.

Read more

Damo Consulting offers branding solutions for technology firms looking to gain visibility and access to healthcare executives and CXOs. 

Contact us now!

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Join the digital healthcare revolution. Stay on top of the latest news, trends, and insights with Damo Consulting.