Matt Gardner of the California Technology Council spoke to Jordan Kramer of Kaiser Permanente Ventures, the venture arm of health giant Kaiser Permanente, to find out what is driving digital health investment, the opportunities and challenges as the sector grows and the healthcare provider's approach to investing in this sector. This article originally appeared in Medtech Insight. A portion of the interview is available here by permission.
Q: Why has investment in digital health grown so dramatically in the last five years?
Jordan Kramer: I think there are several reasons why there has been great enthusiasm for digital health. What makes digital health exciting is the promise of delivering greater value and patient satisfaction while reducing unnecessary costs. Kaiser Permanente is very excited about meeting our members where they are, whether it is care delivered in the traditional setting, remotely or in the member’s home. The recent ubiquity of smart phones has enabled a proliferation of apps that have the promise to be able to reduce unnecessary costs and better manage patients. Essentially, you’re filling in the blanks between episodic meetings with your physician. Instead of having snapshots of a patient’s health, the idea is to get a much broader picture.
Q: Why is the investment climate in device and diagnostic spaces tougher?
Kramer: I think it’s cyclical. The main factors leading to a relative exodus of early-stage medical device investing are two-fold: one is the US FDA and regulatory environment has become less predictable, and secondly, the reimbursement environment has changed. You have two major risks for an early-stage company that venture capitalists feel less competent to predict accurately.
Q: Is this increase in capital toward digital health a permanent shift in venture dollars, or is this a one-time investment?
Kramer: I think the jury is still out. It’s all going to be determined by whether people can actually make money in the space. There have been some exits. I think that there will be some rationalization of, not only valuations in the space, but also the number of players.
Read the full interview on Medtech Insight HERE (pay wall).