Digital Health: Competition for VC Dollars

Digital health is an exciting area, ripe with growing Medicare reimbursements, new technologies, and a real potential to improve the frustrating healthcare consumer experience in the USA.

Jahani & Associates analyzed over 200 M&A transactions and equity investments in digital health from 2013 to 2016. Our results showed a 20% decrease in investment funds per company in 2016 vs 2015. Despite a 604% growth in Medicare reimbursements from 2006 to 2016 and a 62% increase in telehealth consultation over the same period, digital health companies must carefully develop their competitive advantages to both increase access to capital and decrease their cost of capital.

By analyzing companies that maintain competitive advantages such as Welltok, SnapMD, Pager, and TeleDoc we elicited two opportunities for creating value:

There is an opportunity for digital health returns, but companies must respond to a saturating market by focusing on improving the customer experience while at the same time optimizing the business model of existing healthcare giants.

Jahani & Associates recommends digital health companies focus on 4 major intangible assets to accomplish the value goals listed above:

  1. Optimize member access via subscription contracts, members per client, providers per network, and the visits offered to members based on contracts
  2. Create a revenue model driven by customer engagement. Digital health companies are much close to their consumers than traditional healthcare companies
  3. Create a scalable and flexible business model that responds to seasonality, subscription fee, and access fee changes
  4. Consistently provide regulatory compliant solutions in response to existing and expected reforms such as HIPAA 1 and 2, HITECH, ACA, and BPCI

This is all predicated on the ability to identify, develop, and monetize intangible assets using the Jahani & Associates’ intangible asset framework.

Read our article: Identify, Develop, and Implement Intangible Assets to Maximize Your Value

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Joshua Jahani

Joshua is an energetic and passionate leader, technologist, and consultant with over 10 years of strategic planning, tactical centered implementation, and management consulting experience. Joshua utilizes proven qualitative and analytical skills driven by business objectives and up to date technology. He has spearheaded the movement towards rapid evolution and sustainable growth using rigorous profitability, ROI, and TCO analysis for organizations of all sizes. Working with exciting start ups in digital advertising or large Fortune 500 companies keeps him traveling all over the world. He graduated from Cornell University.

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