Our fourth annual Digital Health Summit brought together a select group of investors active in the digital health, life sciences, medical device, and healthcare industries for a one-day meeting to discuss the future of digital health. Here are my top takeaways from this year’s summit:

  1. The “triple witching hour” has arrived for digital health. David Brailer, managing partner and CEO of Health Evolution Partners, kicked off the meeting saying that the triple witching hour has arrived for digital health in the form of improved technology, regulatory and policy reform and increased investment. But he said that we are “still not there yet” in some areas, such as interoperability, data portability and payment models, where there has been very little progress.
  2. The jury is still out on the potential of wearables. A poll of this year’s attendees found them split on the future of wearables, though there’s no question that the sector continues to attract capital. Casper de Clercq of Norwest Venture Partners pointed out that while the consumer market for wearables may appear near saturation, there is untapped potential for wearables in population health – a prospect that still poses significant challenges for many physicians. 
  3. Bundled payments will become a fact of life. The poll also showed that half of attendees expect fee-for-service will be replaced with a value-based payment scheme. But when given the choice between ACOs or bundled payments, 60 percent of attendees chose “none of the above.” Regardless, all of the panelists were confident that a value-based payment system is inevitable and bundled payments are the most likely winner.
  4. Digital Health investment topped $4 billion but that’s only four percent of total venture investment last year. Malay Gandhi, managing director of Rock Health, said we should expect to see clearly-defined industry subsectors such as telemedicine, payer administration and digital therapeutics emerge once digital health exceeds 10 percent of annual VC investment.
  5. Telemedicine is on the rise. Malay told attendees that telemedicine saw the most growth in investment in 2014, increasing by 315 percent. Bob Kocher of Venrock, told attendees that he’s excited about the promise of telemedicine in large part because it’s getting a lot better. Bob explained that early telemedicine pilots were hampered by limited bandwidth, which resulted in low-resolution images and significant time delay. But improved technology, along with the widespread adoption of e-prescribing, now makes telemedicine visits easier and creates a better experience for the patient and the provider.
  6. Consumers want control of their health data and that will require standardization and consolidation. Consumers want more information about their health, and they want to be in control of that information. Janet Widmann, Executive Vice President of Markets for Blue Shield of California, said that that will require a platform where patients can access both their clinical and claims information in one place. This patient-empowered world will mean consolidation within the highly-fragmented digital health industry and potentially the disruption of non-traditional healthcare investors or players. 
  7. Investors disagree about whether digital health companies are overvalued. Casper told attendees that many limited partners are skeptical of healthcare compared to pure tech investments because it’s harder to grow a healthcare company – which results in lower valuations. But he noted that for investors who are willing to deal with the longer development times, healthcare companies can be very profitable in the long run. On the other hand, Bob said he thinks some A and B rounds are overvalued, and Jack Young of Qualcomm Life Fund said he believes a correction in value may have already taken place.
  8. Pharmaceutical companies are finally embracing digital health. Jack told attendees that he’s excited to see pharma getting onboard with the changing healthcare landscape, especially as we enter an era of bundled payments. Pharma has made some forays into digital health by using Big Data tools to improve the efficiency of clinical trials, but only recently have we seen them taking an interest in developing truly therapeutic digital health products.