The integration of digital health into mainstream health care has brought numerous advantages to the field. It has enhanced patient outcomes, improved the efficiency of delivering care, and increased the accessibility of healthcare services. Technologies such as telehealth, remote monitoring and electronic medical records have become indispensable tools for clinicians. That said, there are still considerable opportunities for continued adoption of these technologies and business growth. Thomas Kluz, a venture capitalist and managing director of Venture Lab, is optimistic about the future and continues to look for novel technologies and business models in which to invest.
In the changing realm of healthcare, digital health has undergone a significant evolution. “Digital health is not dead; it’s just health care now,” Kluz says. “This shift signifies not the end of digital health but its seamless integration into the standard practices of care delivery, fundamentally changing how doctors, clinicians and patients interact with each other.
The evolution of digital health
Investments in digital health have dropped from $6.1 billion to $5.7 billion, a decrease of 7% compared to the same period last year, according to a Rock Health report. This reduction in funding can be attributed partly to broader macroeconomic factors affecting the venture market. However, the most significant reason is the profound integration of digital technologies into healthcare.
“When I led health care investing at other large companies, we were operating in a super frothy market,” recalls Kluz. “Every tech investor started investing in health care IT, or what became known as digital health.” This period saw a surge in interest and investment, driven by new legislation incentivizing clinicians to adopt electronic medical records, remote monitoring and telehealth, he says.
The digital health trend was significantly boosted by the COVID-19 pandemic, bringing attention to its importance. Telehealth visits, for instance, increased by 38 times from pre-pandemic levels, showcasing the rapid adoption of digital health solutions.
The hype and its aftermath
After the initial buzz surrounding digital health died down, the sector is now experiencing a period of stability. Valuations and capital deployment have calmed down, reflecting a more mature and integrated approach to digital health. “Now that the hype has settled down, we’re seeing the fruits of our labor,” Kluz explains. “Every entrepreneur, every dollar invested, and all the hard work by clinicians in adopting digital mechanisms has paid off, and we’re in a cycle of productivity.”
This maturation means many digital health technologies are no longer considered novel or separate from traditional health care. Instead, they have become essential components of standard care and operational practices. The global remote patient monitoring market, for instance, is projected to reach $207.5 billion by 2028, growing at a compound annual growth rate (CAGR) of 23.6% from 2023 to 2028, signaling strong continued growth.
While many venture capital activities happen in traditional locations like New York and San Francisco, Kluz, a Chicago native, highlights the contributions of Chicago’s investor and tech-health leadership. “I’m particularly proud to see Chicago’s contributions to advancing digital health.” Kluz draws inspiration from figures like Glen E. Tullman and Andrew Turitz. “With his Chicago roots, Glen proved that venture and healthcare success is possible outside Silicon Valley. His work with Livongo, which merged with Turitz’s Teladoc, revolutionized the industry.” Kluz recalls, “Drew taught me to be a better investor and to find truth in companies. Their merger showcased digital health’s potential to transform patient care on a large scale.”
The current landscape and future prospects
Despite a reduction in funding, the future of digital health appears bright. The groundwork during the surge laid a foundation for ongoing innovation and development. Entrepreneurs and investors are now concentrating on refining and expanding these technologies to amplify their impact on healthcare further.
Kluz concludes, “I’m very happy to see this. While I don’t see as much activity in digital health as before, the digital part has become table stakes and mission accomplished.” This sentiment reflects a broader understanding that digital health is no longer a separate entity but an integral part of the healthcare ecosystem.
The journey of digital health from a hyped-up niche to a fundamental aspect of health care delivery underscores its enduring importance. As the industry continues to evolve, integrating digital technologies could remain a driving force behind improved patient care, access and more efficient and sustainable health care systems.
The news and editorial staffs of the Chicago Tribune had no role in this post’s preparation.