Health care investment trends: Funding of new businesses reaching record highs
The explosion of interest in telehealth has led to record-setting funding for four straight quarters.
Investment in health care enterprises remained strong in the second quarter of 2021, with funding reaching record highs in the areas of AI and telehealth, according to an analysis by CB Insights.
The “State of Healthcare Q2 ’21 Report” covers a wide range of industry sectors, including AI, telehealth, medical devices, mental health tech, and others. The analysis focused on investment, startups, and mergers and acquisitions.
Related: Private equity investment in health care attracting greater federal scrutiny
Among the highlights of the report:
- Global health care investment rose for the seventh consecutive quarter.
- European investment nearly doubled, quarter-over-quarter.
- Mergers and acquisition activity was high, with activity the primary care, women’s health, and mental health areas.
- Early-stage deal share was at its highest since Q3’19, at 54% of overall deals.
Unicorns, omics, and SPACS
The analysis is sprinkled with health care investment lingo, including terms such as unicorns (startup companies valued at $1 billion or more), omics (companies that deal with genomic, proteomic, or other similar data), and special purpose acquisition companies (SPACs)—shell corporations also known as “blank check companies.”
But the report also reveals trends that are continuing to have an effect on the global health care industry. For example, it confirms the explosion of interest in telehealth, noting that the sector has set records in funding for four straight quarters, reaching nearly $5 billion in new deals, an increase of 165% year-over-year.
In addition, it outlined the growth of mental health technology developments, including teletherapy companies. “The employee benefits space saw a flurry of business development activity, the convergence of digital health tech and psychedelic-assisted therapy gained steam, and early-stage digital biomarker companies attracted VC backing,” the report said.
More emphasis on the patient experience—and equity
As other research has found, some change is being driven from the bottom up: the report noted that “patient experience” has grown as a priority for health care executives, based on measurements from earnings calls. In early 2020, the report said, “patient experience” dropped from 106 mentions to 62 mentions by health care executives in such calls—but by 2Q 2021, that number had jumped to a new high of 137.
Health equity is another issue that the industry is taking note of, according to this analysis, which described a new focus on the importance of social determinants of health (SDOH). “The pandemic exacerbated and exposed the magnitude of social and health inequities faced by different racial groups in the U.S.,” the report said. “In April, the CDC declared structural racism—rooted in unequal SDOH burden—a public health crisis.”
In the telehealth arena, the report noted corporate giants Amazon and Walmart are making headlines as they acquire various telehealth businesses. This includes several acquisitions by Amazon as it sets up a telehealth service and plans by Walmart Health to expand its telehealth services into 16 states.
The report also outlined developments in telepharmacy, virtual chronic care, and virtual treatment of mental health and substance use disorders.
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