Health-Tech Investment Trends: A View into the Future of Health | Deloitte US has been saved
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By Peter Micca, partner, National Health Tech Practice Leader, Deloitte & Touche LLP
The COVID-19 pandemic has created myriad challenges in the health care sector, but it also created enormous opportunities for innovators and investors. Overall, funding for health tech organizations have reached record levels, and there are no signs that the pace will slow. Many investors see the post-pandemic era as the beginning of a multi-year opportunity.
In 2020, investors poured $21.6 billion into digital health companies—more than double the investments made in the prior year, and almost four times the amount invested in 2016, according to the research firm Mercom Capital Group. At last month’s annual J.P. Morgan Healthcare conference, Deloitte led a panel of investors who offered their perspective on how investors and entrepreneurs are positioning themselves for the Future of HealthTM. The panel offered a sneak peek into an upcoming report from the Deloitte Center for Health Solutions that explores the innovations and investments we are likely to see in 2021 and beyond.
The Deloitte Center for Health Solutions recently analyzed the latest venture-funding data from Rock Health’s Digital Health Funding database and interviewed 15 health tech investors—venture capitalists, private equity investors, and corporate venture capitalists (CVCs)—to understand their focus and long-term priorities. We also wanted to learn more about the type of innovator that is most likely to succeed in the Future of Health. The report will be published on February 26.
The panelists agreed that the pandemic has changed long-held perceptions about the nature of care and care delivery. At the same time, it also revealed some of the archaic processes inherent to the US health care system. They agreed that 2021 could be an important transition year for the health sector and an opportunity for investors.
All of the panelists suggested that entrepreneurs need to go beyond products that simply improve processes or solve existing problems. The most successful entrepreneurs, they said, tend to be those that establish new trends and are able to define and capture the value that they create. One of the panelists pointed to a portfolio company that had developed a platform to identify patients who have been misdiagnosed or under-diagnosed for mental health issues. The company developed a solution to educate clinicians and payers to treat such conditions before they become more severe and costly. This is an issue that payers and providers often don’t recognize early enough.
Five health care investment trends for 2021
As the world recovers from a devastating pandemic, we expect to see an increased focus on health care consumerism, mobility, and digitization of health care. Investors are looking for entrepreneurs that can make health care more effective, affordable, and consumer-friendly.
Here are five health-tech trends our panel identified for the year and years ahead:
Entrepreneurs who define new markets, dominate them with a strategy people can understand, and extract value will likely be the most successful. Despite some of the challenges, the enormity of the US health care market means there is still plenty of runway left for entrepreneurs who have innovative ideas and the work ethic to turn those ideas into reality.
Peter Micca, Deloitte & Touche LLP, is a partner with 30 years of experience serving a broad array of clients in all sectors of the health care, technology, and life sciences industries. He has significant experience with health technology organizations, software as a service (SaaS) organizations, pharmacy benefit management, clinical and diagnostic operations, emerging growth, as well as private equity–financed organizations in life sciences and health technology and services. Micca applies a deep knowledge of industry sector business issues regarding the emerging trends surrounding consumerism, convergence, cost considerations, regulatory and compliance issues, and consolidation.