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The Healthcare Investor Insights on Issues & Trends that Impact Investments in Healthcare & Life Science Businesses

Healthcare Investors Turn Increasingly to Information Apps

Posted in Healthcare Services Investing

Investments in healthcare information technology rose 78%, to $766 million in 2011, from 2010 and has doubled since 2006, according to statistics from National Venture Capital Association.  Data from Mercom Capital Group, a consultant to health-care companies, show funding totaled $184 million in 27 deals in the first quarter of 2012.

Rock Health, a seed accelerator for health technology start-ups, reports that industry venture investments of $2 million or more per transaction have increased about 30% this year, with the majority of start-ups receiving, an average of $11.8 million.

In a recent article by Anna Edney in Bloomberg, increasing numbers of venture capitalists are investing in start-up companies that create tablet and smartphone applications for healthcare practitioners and medical centers.

Qualcomm Inc.has started a $100 million fund; the first investment from Qualcomm Life Fund, which was formed in December, was in Airstrip Technologies , for an undisclosed sum, completed just this past February.

AirStrip Technologies developed a software platform to send critical patient information directly from hospital monitoring systems, bedside devices, and electronic health records to the healthcare provider’s mobile device. AirStrip applications, which are FDA-approved and HIPAA-compliant, are powered over wired and wireless networks, delivering real-time clinical data.

Insight Venture Partners is putting $40 million into a startup. Managing director Richard Wells sees the innovative apps as a service whereby doctors can schedule appointments, hospitals and clinics can monitor patient data and corporate health plans can utilize the software as online wellness tools.

As we have discussed in prior posts, with an impetus from both insurers and government to collect better healthcare data in an effort to control costs, demand should only increase for applications that let practitioners get test results more efficiently and monitor patients’ vital signs from remote locations. Although investment in traditional medical device companies still eclipses medical app investments, that segment has seen a reduction to $2.8 billion in 2011, from $2.9 billion in 2006. This, the article states, may be due to the unpredictability of FDA reviews and the fact that most devices are subject to regulatory reviews where companies are required to demonstrate that their product is reasonably safe and effective before being approved; apps do not require this intervening process.