It certainly appears that the Affordable Care Act will endure and will likely be strengthened to drive for lower premiums, better plan design, offering public options and perhaps even lowering the Medicare eligibility age to 60. Interestingly, prescription drug costs are running ahead by 2.9% since the onset of the pandemic.īoth the dramatic re-prioritization of budgets due to COVID-19 and the equally dramatic changing political environment point to continued sector strength. Just over the course of the pandemic, there has been a dramatic rotation of healthcare spend to more “socially distanced” locations. Through the ten months up to October 2020, healthcare spend was trending 2.3% below the similar 2019 period. “As the healthcare system rapidly moved to be more on-demand and virtual, providers scrambled to incorporate innovative solutions to ensure continuity of care.” As the healthcare system rapidly moved to be more on-demand and virtual, providers scrambled to incorporate innovative solutions to ensure continuity of care. Further, whenever possible, home health replaced nursing home care. According to an analysis by Health Affairs, in January 2020 (pre-pandemic) tele-visits were less than 1% of all doctor / patient interactions, but has grown to approximately 6% (and enjoying improved reimbursement rates). Undoubtedly, the pandemic played a significant role in all of this activity. The Role of COVID-19 in Shifting Healthcare Spend This is a clear indicator of maturity in the sector and that there are now a number of “emerging winners.” Liquidity in the healthcare technology sector was also quite robust with 145 M&A transactions, six IPOs and seven SPAC offerings. Interestingly, there were 40 financings that were greater than $100 million in size, accounting for 57% of the total activity – undoubtedly explaining why the average deal size spiked to be nearly $32 million, more than 50% larger than 2019’s figures. $1.7 billion directed toward fitness/wellness opportunities.$1.8 billion invested in behavioral health companies.$2.0 billion for drug discovery/development.$2.7 billion invested in “on demand” healthcare.Rock Health identified four significant categories of activity: Notably, healthcare technology investment was just over 9.0% of all venture capital activity in 2020 ($156.2 billion – an all-time record high). Other sources tabulated somewhat different results, but the trend was the same ( Mercom – $14.8 billion across 372 companies: MobiHealthNews – $13.8 billion across 637 companies). According to Rock Health, a record $14.1 billion was invested in 440 companies not quite doubling the $7.5 billion invested in 2019. Business was really good last year, yet the world all around continues to suffer in so many profound ways.Ģ020 investment data demonstrates that it was a very strong year for both new commitments and liquidity. Healthcare technology investors are in a quandary. We will update the database as we find additional impactful health tech VC’s.Michael Greeley, General Partner at Flare Capital Partners, offers his take on the healthcare industry’s growth and what it means from a venture capital perspective. In the database, you will find the following information about each firm: These firms focus on backing companies in sectors such as digital health, medical devices, diagnostics tools, tech-enabled services, and pharma. To simplify the process of raising funding for your health tech startup, below you will find a database of healthcare-focused venture capital firms. Luckily, with increased health spending, VC funding to upstart HealthTech companies has grown in lockstep. To develop these products and bring them to market, most entrepreneurs will need to raise outside capital. As the healthcare industry experiences meaningful growth over the next few years, startups will have plenty of opportunities to create products that improve the effectiveness and efficiency of care.
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