Healthcare Technology Featured Article

April 23, 2013

Healthcare IT on Track to Raise $2 Billion in Venture Capital This Year


During Q1 of 2013, venture capitalists poured $493 million into health IT (HIT) firms, according to data from the Mercom Capital Group.

The companies that snagged the largest investments were companies that had consumer-related healthcare products, data analytics and cloud computing solutions.

Health Catalyst, a data warehousing company, received $41 million. They were followed by xG Health Solutions, a company that provides population-level healthcare solutions. Also notable was that Fitbit, which creates mobile healthcare apps, which absorbed $30 million in venture capital.

If current investment persists, HIT will raise about $2 billion in investments from venture capitalists. Top recipients of capital were consumer-related HIT companies that featured telehealth, social networking and personal health.

According to the Mercom Capital Group, venture capitalists find consumer products related to HIT attractive for investment because the wealth of healthcare information accessible to consumers with mobile devices creates a huge new market. To make money off of the trend, larger healthcare companies have started to either invest in HIT or to form their own HIT companies.

Last year's investments in HIT topped $1.2 billion, more than twice the level invested in 2011. While health information management was the largest investment category for 2012, the number of venture capital HIT deals tripled compared with 2011.

Healthcare information management continues to be attractive to investors. Statistics shows 45 mergers and acquisitions related to healthcare information management in Q1, with the largest being athenahealth's acquisition of Epocrates or $293 million. Epocrates develops mobile apps for point-of-care solutions.

Earlier this month, CDW Healthcare listed five IT trends that would transform healthcare in 2013 and beyond. Mobile networking will grow, with at least 3 million patients monitored by mobile means by 2016. Additionally, 44 percent of hospitals will adopt virtual desktops for faster data access.

CDW also predicted that by 2016, 50 percent of hospitals will use "big data" analytics to identify population and treatment trends. Telehealth will cut the number of hospital readmissions, and 66 percent of doctors will use tablets as a routine part of providing care.

"The enormous market opportunity in consumer-focused health has appeared to pique the interest of investors and is likely to continue to grow as witnessed by the surge in VC activity," said Raj Prabhu, CEO of Mercom.




Edited by Stefania Viscusi
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