Over the past 8 years, health systems made 184 investments in 105 early stage digital health companies. We describe key ways in which health systems are acting as a small but important group of investors in digital health companies. The financing of digital health companies represents a new effort in which health systems are seeking to shape the future of healthcare-one with complex incentives and boundaries. Investments by all other digital health investors ( n = 4349)Ĭlinical decision support and precision medicineĬustomer acquisition and relationship management Investments by healthcare systems ( n = 184) The top 10 health systems with the most investments during the study period accounted for 102 (55.4%) of all investments made by health systems (Fig. Among all health systems investors, 45 (81.8%) were associated with not-for-profit systems. Among all health system investors, 20 (36.4%) were associated with academic health systems. The number of investments made by other investor types included: traditional venture capital 2855 (65.7%), corporate venture capital 590 (13.6%), other 391 (9.0%), private equity 215 (4.9%), angel groups 95 (2.2%), accelerators and incubators 93 (2.1%), hedge funds or asset managers 76 (1.7%), and foundations or impact investors 31 (0.7%).įigure Figure1 1 demonstrates the number of investments by health systems and all other digital health investors from 2011 to 2018, with 2019 omitted as it is a partial year of data. Health systems participated in investment deals that totaled $2.1 billion. They accounted for 184 (4.1%) investments and invested in 105 (8.6%) of companies.
Among investors, 55 (3.4%) were health systems. We describe patterns among health system investors, including the volume of investments, the types of products and services that they invested in, and how their investments compared to other investors in digital health.ĭuring the analysis period, there were 1629 investors with 4533 investments across 1215 companies, with an aggregate investment of $33.0 billion. They must be cautious of encouraging patients to use digital services in which they have a vested financial interest.ĭespite their unique position, little is known about health system venture investment into digital health companies and how their activity compares with other digital health investors.
Health systems must be wary of giving companies in which they have a financial interest access to patients and their data without appropriate regard to data privacy, ownership, governance, and security. Unique conflicts of interest may also exist. Thus health systems can impact the companies that they invest in as simultaneous financers, co-developers, and future customers. Their live clinical environments can be used for product testing and development.
Compared with other investors, health systems can provide unique value to companies as they hold domain expertise and direct access to both providers and patients 8, 9. For their institutions, they offer the promise of both financial returns and strategic positioning by supporting companies that build solutions to address clinical and operational challenges. Venture capital funds managed by health systems are in a unique position. Health systems have recently joined the massive digital health investing trend. Recently, a growing body of literature has sought to evaluate how private sector investments are shaping our broader healthcare landscape 4– 7.
Through their investment choices, investment capital firms have attempted to shape the future of digital healthcare innovation. Over the past decade, billions of dollars have been invested into the sector with a 400% increase in investment deals during this period 3. Growth in digital health has been bolstered by investment capital firms, which have provided much of the financing for new companies. Advancements in digital health promise to disrupt healthcare by enabling greater connectivity between patients and providers, expanding the scope and utility of health data, improving the patient experience, and reducing waste 1, 2.
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