What Is Fueling Investor Excitement In Healthtech?

Dileep Gupta November 21, 2023
Investment in healthcare technology

One of the most vibrant and quickly expanding economic sectors today is health tech. Healthcare organizations are utilizing cutting-edge technologies, such as virtual consultations and remote monitoring, to enhance patient outcomes, lower costs, and broaden access to care. Hence generating a wave of excitement among investors seeking to invest in healthcare technology with the potential to upend the current healthcare system.

This year, the majority of financing will likely go to digital health businesses with increasing investment in the healthcare sector. 

Healthcare software development investors and innovators expect the number of deals and total invested cash to establish new benchmarks in an environment where launching healthcare technology solutions are growing easier.

The global digital health market by 2025 is estimated to reach a valuation of $660 million, growing at a CAGR of 25%. 

Global Digital Health Market size

The figure itself shows how the digital healthcare market is gradually growing, creating promising opportunities for healthcare investors.

The Rapidly Growing Digital Healthcare Market

It makes sense that the majority of digital mobile app development firms are working on products that have a direct impact on patient care. A market worth $157 billion (as of 2019) and accounting for 45% of the entire digital healthcare business, roughly 49% of our digital healthcare companies fall under the care category (better therapy, patient remote assistance, or patient treatment).

healthcare investments

Companies in this space either provide cutting-edge digital solutions, like Livongo for diabetes or use technology to increase patient access to care. Two examples of the latter are Teladoc (which offers telemedicine and remote patient help) and Pillpack, an online pharmacy (supplying therapies to patients). By 2024, it is anticipated that each value pool in this group will have grown by at least 10% annually.

Competitive care supply pools are an intriguing idea for businesses interested in developing healthcare apps due to the combination of sizable market sizes and rapid growth rates, but patient care is not the only potentially lucrative choice for those interested in digital health.

Key Reasons Why Healthcare Investments are the New-Found Interest of Stakeholders

Reasons what investors are investing in health tech

Let’s discuss the vital reasons that lead to the dramatic increase and attention towards healthtech companies, where digital health investors see huge growth potential.

1. The Increasing Adoption of Digital Technologies in Healthcare

Electronic health records (EHRs), telemedicine, and remote tracking devices are just a few examples of how digital technology is being used more and more in healthcare.

EHRs enhance care coordination and lessen errors, telemedicine enables virtual medical care and reaches remote and underserved areas, and remote monitoring devices, which have been used in post-acute care and home care settings, enable early intervention and improved outcomes.

Nevertheless, adding an automated diagnostic procedure to the system can improve both speed and accuracy. Technology also aids in identifying when a patient deviates from the usual course of treatment, making it simpler for doctors to act immediately.

YouCOMM platform, developed by Appinventiv, allows hospitalized patients to communicate with medical personnel, particularly nurses, to receive assistance with fundamental needs.

2. Impact of COVID on the Health Sector

Many people had their first virtual visit during a time when patients couldn’t see doctors face to face because of the infectious nature of COVID-19. Pre-pandemic telemedicine visits accounted for only 1-2 percent of all ambulatory care visits; now, they account for 30% of all visits. 

According to healthcare technology trends listed by Forbes, the market for artificial intelligence (AI) tools, more particularly machine learning (ML) tools, is anticipated to reach $20 million in 2023. Computer vision, natural language processing, and pattern recognition algorithms are just a few of the AI-aligned technologies that are already well-established in the healthcare ecosystem and will continue to be accepted as more and more data demonstrates their value through 2023. By 2023, healthcare IT investment will shoot to $25 billion despite the market downturn pressure.

The year 2020 will be remembered as a watershed moment for digital healthcare companies. Funding increased by 72 percent from a record high, totaling $14 billion invested over 440 agreements, because of the COVID-19 pandemic. 

With $4.3 billion in big tech investment in healthcare, telemedicine alone set new milestones. The total amount of money spent on digital health has reached an all-time high of $29.1 billion in 2022.

According to a recent GSR Ventures poll of 50 digital health venture capital investors, VCs actually intend to invest in approximately the same number of health tech companies this year as they did in 2021.

3. The Transition to Value-Based Care

The conventional fee-for-service healthcare model is being replaced by a value-based care model.

Substantial demand for healthcare and technology solutions that can help healthcare providers provide more effective and efficient care is being driven by the new approach, which prioritizes patient outcomes and the quality of care.

Predictive analytics and remote monitoring system are two prime examples of healthcare technology innovation. Due to the proactive identification and treatment of potential health problems made possible by these technologies, healthcare providers are able to intervene sooner and improve patient outcomes. Additionally, innovative health technology like telehealth platforms and remote patient monitoring devices give healthcare professionals access to real-time data and insights, empowering them to make quicker and more informed choices to improve patient outcomes.

4. Government Support and Investment

Governments worldwide are aware of their promise to implement innovative technology in healthcare to enhance patient outcomes and lower expenses. They are therefore making significant healthcare investments to fulfill the same. As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the US government has invested over $20 billion in digital health technology, providing one noteworthy example.

This kind of sizeable investment in healthcare technology frequently opens up new possibilities for health tech businesses and fuels healthcare investors’ interest in the sector. The government’s assistance also entices more investment in healthcare technology market, accelerating development and technological innovation in healthcare sector. 

This paves the way for wider adoption of digital healthcare IT professional services, which will improve patient results in terms of healthcare as a result.

5. Other Driving Forces

Changes in payment policy from both government and commercial payers are driving investment in healthcare, for example, telemedicine. It was rapidly apparent that telehealth might increase efficiency and lower costs while allowing for more access to care and reducing patient demand in institutions. 

By engaging patients more frequently and at a lower cost, preventative care can help reduce preventable readmissions to the emergency department.

 [Also Read: How to develop a white-label telemedicine app? Process, Features and Costs]

Healthtech venture capital for healthcare technological investments and healthcare startup funding has risen dramatically from $15 billion in the first half of 2021 to $21 million in 2022.

health-e-people health assessment app

The Right Time to Harness the Power of Technology Innovation in Healthcare

Companies believe that now is an ideal time to enter, collaborate and invest in the healthcare market because digital interventions can improve health outcomes across a range of therapeutic areas (such as diabetes, asthma, and coronary diseases). Investors, established healthcare providers, and newcomer entrepreneurs alike should bear in mind the following three factors as they prepare for the new normal:

Refine and Develop Healthcare Technology

Many of the quick changes in healthcare systems and medical technology innovations have been prompted by the COVID-19 pandemic.

In light of this, established key healthcare players, investors, and innovators in the field of digital health should think about constantly redefining, updating, and evolving these value pools and possibly reconsidering where to play. A clear definition of how value is being created (for example, better clinical outcomes or decreased total cost of care) and for whom is crucial for a digital health innovator or investors in healthcare startups.

Explore Joint Ventures and M&A

Any digital healthcare company that adopts and accelerates a through-cycle M&A mindset can position itself for better success in the upcoming years.

Companies now, are increasingly adopting a collaborative mentality in the healthcare tech industry after realizing the opportunity to create value through the formation of joint ventures (JVs), alliances, and partnerships, as well as through the acquisition of complementary businesses.

Make a Commitment and Execute

Players in the digital health industry or healthcare investors need to be quick, adaptable, and nimble. Acting quickly and decisively is now regarded as being even more crucial in the current situation, where external disruption has caused players from all angles to reevaluate how they can contribute or find value. 

The next norm will depend on committed healthcare investments in digital innovation, organization-wide support, and execution readiness, regardless of your position—investor, CEO of a sizable healthcare business, or founder of a digital health startup.

Take your First Step Towards Medical Technology Investment with Appinventiv

Industry trends are capable of both fueling long-term innovation and creating hype that implodes. If coupled with conditions such as unjustifiably high valuations, a flood of new entrants, and a poor exit market, a growing market and rush of interest might signify over-enthusiasm.

Healthcare and technology investment and health tech fund strategy are in full swing now that most of it have centered on leveraging healthcare software development services.

Are you prepared for this change? If you think you are ready to imbibe the changes in your app or ideas, then you can refer to Appinventiv, a trustworthy and reliable digital healthcare company that would help you expand your health tech journey. Connect with the experts to understand the advantages and intricacies of venturing into healthcare investments.

FAQs

Q. What are the benefits of investing in healthcare?

A. Investments in the healthcare sector take a multifaceted approach that goes beyond just practicing medicine or building hospitals. Instead, they expand to include new, more innovative, and quick services like medical robotics, laboratory science, data management, healthcare instrumentation and automation, distance medication, medical facilities, and medical insurance, as well as traditional approaches.

Let’s examine the current factors that one might take into account when engaging in healthcare innovation.

  • The aging population demography
  • Global need for innovative technology in healthcare
  • Requirement for better medical infrastructure and facility
  • Better healthcare outcomes with technological innovation in healthcare
  • Healthcare stocks offering long-term growth potential
  • Healthcare earnings can hold up the economic downturn

Q. Are there any risks in investing in medical technology?

A. The majority of health tech businesses must contend with several new risks and challenges as digitalization advances, including:

  1. Patient Data Security: As the collection and storage of health data have increased in the digital era, it is essential for health tech companies to guarantee patient data security and compliance with HIPAA and GDPR. Given how sophisticated and evolving cyber threats have become, this poses a serious problem.
  2. Artificial Intelligence (AI) and Machine Learning (ML): In a field with quick-moving advancements, health tech businesses that use cutting-edge technologies like AI and ML must also make sure that their algorithms are unbiased, open, and precise.
  3. Remote monitoring and telemedicine: Another challenge for health tech companies that offer these services is the ongoing monitoring and updating of security protocols. They must ensure the accuracy and reliability of the data collected remotely, implement strong security measures to protect patient information, and comply with all applicable regulations.
  4. Threats to cybersecurity: As the use of digital technologies in healthcare increases, the likelihood of cyberattacks and data breaches is becoming a more serious problem for health tech businesses.

Utilizing contemporary technologies frequently compromises private patient data, harms the company’s image, causes financial loss, and non-compliance fines.

Q. In what sense is healthcare an investment?

A. Healthcare innovations can provide top-notch and crucial amenities to patients who are in need, and this will give investors the interior fulfillment of improving the healthcare sector in addition to financial gain from investing in the sector as a whole and/or its supporting industries.

The healthcare sector can offer generous returns on investments, but investing in it can be time-consuming due to the numerous market factors that influence it. There are numerous businesses to choose from across the various sectors in the enormous healthcare innovation market. You can engage in healthcare investment options like ETFs and mutual funds to lessen this burden. One of the best areas to engage in is healthcare innovation.

Q. How will investment in health infrastructure benefit the masses?

A. Investment in healthcare technology improves the potential healthcare outcomes and delivers better, innovative solutions. Here’s how much healthcare technological investments prove to be beneficial for the masses:

  • Speed and precision in diagnosis
  • Fewer errors
  • Better communication
  • Higher patient satisfaction
  • Early detection of diseases
  • Easy access and transfer of data
  • Paperless activities
  • Improved patient care
  • Efficient handling of emergencies
  • Data-driven insights
THE AUTHOR
Dileep Gupta
DIRECTOR & CO-FOUNDER
Prev PostNext Post
Read more blogs
DICOM software development

How Much Does It Cost to Build a DICOM Medical Imaging Software?

The modern healthcare landscape heavily utilizes advanced imaging technologies to diagnose and plan treatment effectively. As indicated by market projections, the sector is experiencing substantial growth with the valuation expected to surge from $7.52 billion in 2023 to $12.76 billion by 2030. Among the array of imaging technologies and protocols, Digital Imaging and Communications in…

Dileep Gupta

How Much Does It Cost to Build a Medical Appointment App Like Doctolib?

When it comes to the European healthcare industry, the increased proliferation of mobile applications has redefined the way healthcare services are accessed and delivered to people across the continent. At the forefront of this digital revolution is Doctolib, a healthcare app that has become a cornerstone in reshaping the region's economy. Doctolib's innovative business model…

Peeyush Singh
How Much Does It Cost to Build a Fitness App Like Strava

How Much Does It Cost to Build a Fitness App Like Strava?

Mobile health (mHealth) applications are becoming increasingly popular, revolutionizing the way we approach fitness and health management. The global mHealth apps market, valued at $43.5 billion in 2022, is a testament to this growing trend. It's expected to expand at a compound annual growth rate (CAGR) of 11.6% from 2023 to 2030, indicating a booming…

Dileep Gupta