In 2012, 52 percent of people gathered health information on their smartphones and nearly one-fifth reported having downloaded a health app, according to a Pew Research Center study. But with over 100,000 health apps available for download and an mHealth market estimated to reach $26 billion in the next two years, competition for funds and consumer engagement is intense. At “Put Your Money Where Your Smartphone Is: Investing in Innovation,” a panel at the 12th annual Partners HealthCare Connected Health Symposium, mHealth investors offered their expert perspectives on such topics as the industry’s potential and future predictions, what they look for in companies, and tips for startups in the smartphone space.
Dan Gebremedhin, Senior Associate at Flare Capital, advised startups to focus on pilots as a means of creating contracts “that have teeth in them.” Doing so can help create actual paying customers.
Roger Kitterman, Executive Director of Venture with Partners Healthcare Innovation, identified the importance of having an executive sponsor. “If they like it they become a customer,” he continued. “If that’s your sponsor then you will get broad adoption.”
Gebremedhin, whose firm has invested in health IT companies like Iora Health, Welltok, Predilytics, and Valence Health, and the panelists overall stressed the importance of understanding where a project fits in the value chain. “If you are a small piece of middleware, it’s hard to control the value-chain and build a large company,” he said. “A larger stage VC firm invests in business that are million dollar businesses and owning the value chain is very important.”
Sanjay Gokhale, Director of eHealth Cluster Development with MassTech at the Commonwealth of Massachusetts commented on the importance of having healthcare experience which is essential to understanding the business and service models of healthcare. Gebremedhin agrees saying, “It’s very hard to do from the outside, the best way to get that experience is to actually work there.”
Roger Kitterman, Executive Director of Venture with Partners Healthcare Innovation expressed a positive outlook on the future of digital health innovation while Gokhale predicted that care coordination and evidence based medicine will become increasingly more important, as will transparency and consumer choice. He says healthcare technology is the enabler for of all of these trends.
Gebremedhin pointed out that the majority of commercial based health plans will be high deductible plans. Companies will emerge which will manage consumer debt. He also said way we take care of patients will change since there is a resource utilization mismatch and we spend too much time on healthy people and not on people with chronic conditions.
“I don’t see the funding climate declining. Healthcare technology is still evolving and the government is still shifting from fee for service to pay for value, so there will be new markets in healthcare,” he said adding, “Entrepreneurs think mobile first.”
Robert Schultz has an MBA in Information Systems from University of Massachusetts-Boston and a BS in International Business from Northeastern University, where he served as Business Manager for the university’s largest student publication, The Northeastern News. Schultz is an experienced healthcare technology startup enthusiast who was involved with the patient monitoring company Aware Engineering through the MassBio MassCONNECT program.
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