Driven by evolving consumer expectations, start-up funding for digital healthcare, such as tele-health or wearable technology, is expected to double in the United States over the next three years, growing from $3.5 billion in 2014 to $6.5 billion by the end of 2017, according to new research by Accenture.

According to Accenture, an estimated $2.8 billion was used to fund digital health start-ups last year, growing at an annual rate of 31 percent since 2008. Accenture projects digital health start-up funding will grow to $4.3 billion in 2015, and it is expected to reach $6.5 billion by the end of 2017.

The research found that between 2008 and 2013 start-up funding totaled $10.2 billion for digital health solutions addressing four market segments:

  • Infrastructure capabilities, such as interoperability and health analytics, accounted for an estimated $2.9 billion in start-up funding, which was used by organizations to comply with industry changes and federal Meaningful Use guidelines.
  • Engagement solutions, such as wearable technology and incentive programs targeting behavioral change among patients, received $2.6 billion in start-up funding.
  • Treatment tools, which enable alternative care channels by leveraging technology, such as tele-health, also received $2.6 billion in start-up funding.
  • Diagnosis technology captured $2.1 billion in start-up funding, representing a rapidly growing segment of clinical and consumer tools, such as remote monitoring, that provides practitioners with real-time insight.

Five key drivers are business opportunities and digital health start-up funding: healthcare system waste, the blending of physical objects with digital technology, industry newcomers, new investment models and social motivation. To varying degrees, these drivers will continue to fuel the acceleration of digital health funding, ultimately disrupting the industry, according to the study. Billions of dollars are being poured into healthcare companies that combine Social, Mobile, Analytics, Cloud and Sensor (SMACS) technologies, with leading companies aiming to link both products, such as “wearables,” and services, such as clinical advice lines.

The 2014 Accenture study projects U.S. funding for digital health start-ups. The forecast is based on market analysis, project experience, third-party analysis and data from 2,000 digital health start-ups receiving funding between 2008 and 2013. Pure-play medical devices, bio-tech, consulting/advisory firms and public companies were excluded from the research.

[Graphics courtesy: Accenture]