Venture capital funding for health IT rebounds in third quarter
According to a new report from global communications and research firm Mercom Capital Group, venture capital funding for the health care information technology sector increased 32 percent quarter over quarter. The funding is up 66 percent from the same quarter in 2014. After a slow second quarter of 2015, the third quarter saw 148 deals. This quarter brought in $1.6 billion while Q2 was only at $1.2 billion, and this year's total VC cash is now estimated at $3.57 billion.
Digital consumption in health IT
One of the main growth factors for health care information technology in recent years has been consumer based. Patients want the mobility, accessibility and flexibility of online heath care and the industry is responding to that. According to U.S. News & World Report, 3 out of 5 patients would prefer digital health check-ups over office visits, and new health care technologies have made that possible. Electronic health records have already proven to increase effective communication and patient care. The integration of technology and medicine has the potential to go even further and change the entire medical experience as well as the relationship between the doctor and the patient.
Fundraising growth
Many companies experienced their best fundraising quarter since the tracking of the sector began, according to Mercom Capital CEO Raj Prabhu. Healthcare IT News reported that companies that are consumer focused gathered 106 deals and raised $1.2 billion this quarter, in line with the consumerization of medicine. Those that focused on the provider side accrued $357 million in 42 deals. The top overall category for funding growth this quarter was rating, booking and comparison shopping. With 59 deals raising $319 million, mobile health companies ranked second.
"Consumer-focused health IT companies have continued to grab a larger portion of VC funding but have consistently lagged practice-focused companies in M&A activity," said Prabhu. "This quarter, however, M&A activity increased with 18 consumer-focused transactions, the highest number for these companies in a single quarter. It is a very positive trend if it continues because IPOs have not proven to be a sure path to success for the sector."
