The US Healthcare system is a vast, unwieldy beast that requires significant navigation by any company in the healthcare space. Whether you’re a Big Pharma, a small biotech or an innovative digital health developer, access to this market (and its payers) is likely to be make or break for your business.
This, in a nutshell, is why our latest report focuses on digital health in US health systems. It’s a huge market driving much of the innovation and growth in the digital space. Galen Growth’s HealthTech Alpha solution reveals that in 2023, 26% of all global partnerships for digital health ventures founded in the US were with health systems and hospitals. This is more than any other vertical – it’s not a space that can be written off as “too difficult”. However, there’s a lot to understand with over 6,000 hospitals and more than 400 health systems across the US.
As we’ve covered in previous blogs, funding in the digital health space is challenging in the current environment. An increasing number of ventures are being forced to declare bankruptcy or sell assets, meaning that health systems need to be careful about selecting partners to ensure they have long-term viability. Galen Growth’s research shows that 61% of digital health ventures partnering with US health systems have not raised funds in the last 18 months.
Involvement in digital health is not evenly spread across those 400 systems. Over the past five years, the 75 health systems and hospitals with the most disclosed partnerships in digital health accounted for 50% of the partnerships. This shows a cadre of health systems that are committed to the opportunities in digital health, but it also means that a huge 80% of them have limited or no activity in digital health at all.
What are the key challenges and opportunities for partnerships between these two groups? With out-of-date processes and staff shortages, health systems need a new approach. 2023 saw a 1.3x year-on-year increase in partnerships with digital health ventures, and healthcare providers announced the largest number of new partnerships last year, well ahead of tech and pharma groups. Greater efficiency is the goal in many cases, and a recent EY survey shows that 90% of healthcare executives who have implemented digital health tools indicated that “their department has more time to handle the needs of healthcare providers”.
These efficiencies cut across multiple areas. In the report, we explore the growth of several solution areas, all of which are aligned to perennial pain paints. Health management solutions, population health management, and medical diagnostics all saw an increase in partnerships last year. However, telemedicine saw the greatest rise, growing from 7% to 14% of the partnerships formed last year and addressing a long-established need for operational efficiency.
The report covers much more than I’ve summarised here. It is essential reading for digital health companies looking to establish themselves in the US and those who need to better understand the investment opportunities in digital health. I hope you find plenty in there to give you food for thought.
*[1] 3. EY Health Pulse Survey: Solutions Boost Efficiencies and Automation, but ROI has Yet to Come; 9 Feb 2024
