While the economy has been volatile during the pandemic, digital health companies to strike deals with investors raking in more money than ever before.
"We’ve already surpassed $7.5 billion in funding and are on track for this year to be the biggest funding year yet in terms of US-based digital health companies," Megan Zweig, chief operating officer at Rock Health, said during a fireside chat at HIMSS’ Accelerate Health event yesterday.
“Perhaps not surprisingly, the pandemic immediately altered the entire health system and consumer needs. Never have there been such urgent demands to deliver care at home to track symptoms remotely and to track mobile care management solutions.”
In part, an ease of regulations has been helpful in facilitating the transition to digital tools.
“We’ve seen unprecedented action from the government to build the regulatory framework and policies to make these solutions available,” she said. “Some of these policies will expire at the end of the public health emergency declaration, but CMS is proposing that many of these will stay in place.”
One area of digital health that bloomed during the COVID-19 pandemic was the traditional telemedicine visit.
“At the peak of [COVID-19], one estimate shows that 69% of all medical visits were happening via telehealth. That number was closer to 0 last year. It may have been at .1% or .2% and now we have started to see a slight dip in the utilization of telehealth as people are starting to go back to in-person visits.
"But those telehealth visits aren’t going back to 0. It’s unclear what it will be, but it will certainly be much greater than what we have seen in the past. The degree of change in demand and transformation is rare in any industry. Investors have taken notice, including us.”
As money continues to pour into digital health, Zweig said that some of the focus has shifted to how digital health companies are maturing and exiting. One of the most popular avenues for exiting is M&A.
“These types of platform expansions [and] rollouts, have become relatively common. Sometimes they are for added analytic capabilities, sometimes for geographic reach, and sometimes [for] new clinical services and areas, like in the case of Omada and Physera,” she said.
But it was Teladoc’s acquisition of chronic-care management company Livongo for $18.5 billion that really shook the digital health world and caused an outpouring of speculation.
“To give you a sense of the size of the deal, $18.5 billion is actually 41%, so almost half of all venture funding that has flowed into digital health companies since 2011," Zweig said.
Zweig said that the “Teladongo” deal is one type of business proposition for how virtual could go, and represents a fully integrated virtual-care experience.
“One important piece of the deal is that adding Livongo starts to untether Teladoc from its expensive physician staffing model. So, its asynchronous AI-supported health-coach model of Livongo does add this degree of scalability. But is this the only type of platform that is going to emerge? Probably not.”
She noted that major retailers like Walmart and CVS are looking at other models that tap into their brick-and-mortar spaces, as well as their consumer data. Hims, Ro and Lemonade provide another kind of model Zweig said, where they integrate synchronous and asynchronous telemedicine with medication delivery. But there is still a long way to go in digital health.
“We’re definitely moving from virtual care 1.0 to virtual care 2.0, and there will be many iterations of it.”