Venture investment has tripled since last year in the digital health category. The growth in funding has been fueled and in turn encourages different health offerings, creating a more diverse and dynamic environment.

Legislation, startup entries and mobile apps have all been indicators that the digital health sector has been growing quickly. Another factor has underscored this development – private financings in the sector have more than tripled in the first half of 2012. Digital health investments « grew to $499 million in 46 transactions during the first half of the year, compared to just $156 million in 19 transactions for the same period in 2011,” a 317 percent jump, according to Burrill & Company (PDF). Venture investors are responding to the attention that the segment is receiving, an area that seeks to improve healthcare costs, access and delivery by developing information, wireless and healthcare technologies.

Increased funding of digital health projects reflect “a growing awareness of the transformative power these technologies are bringing to healthcare,” says G. Steven Burrill, CEO of global financial services firm Burrill & Company. As Burrill further explains, the area attracts both “traditional technology and life sciences investors,” who recognize that this tech can reduce cost, as well as improve and personalize care. This activity extends past VCs, however, as shown by the Rock Health funding database. Their figures show $675 million in digital health funding over this same time period when tracking more investment companies, and sees four main themes in investment within the field: Physician Tools, Sensors, Home Health and Data.

A wider variety of offerings has revealed diverse interests within the field. The digital health sector is becoming more complex, as apps and startups are answering different types of needs. Physician tools aid doctors in a variety of contexts – DocuTAP manages workflow for urgent care practices, drchrono puts health records in the cloud, Tigertext creates a mobile messaging network and HalfPenny connects and integrates healthcare. Sensors extend patient monitoring for better efficacy, diagnosis and response with devices from BodyMedia, AliveCor and FitBit. Home health creates web-based software (Kinnser) or improves patient engagement (Innovatient Solutions). Data/Analytics compares costs and services for employees with Castlight Health, or addresses industrial-scale data analytics needs with GNS Healthcare.

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