16 January 2022 |

The 2021 Digital Health Explosion

By workweek


The 2021 Digital Health Explosion

A new Rock Health report showed digital health funding in 2021 nearly doubled from $14.9 billion to $29.1, the largest year-to-year increase ever. 

The Deets
The number of deals in 2021 increased by 50% to 729 deals. 2021 had some of the largest digital health deals ever, with 88 mega deals (over $100 million raised) accounting for 57% of the year’s total funding. Some highlights: 

As predicted, digital mental health funding nearly doubled and held its place as the highest-funded digital health sector. Diabetes digital health funding—which more than doubled year-over-year—followed behind mental health. I have my money on diabetes management startups in 2022. 

While funding was raining on startups, an average of 23 digital health startups exited via M&A per month, and a total of 23 startups exited via SPAC/IPO—double and triple 2020 numbers, respectively. 

But Why? 
Digital health wasn’t the only area having funding field days: venture capital investment across all industries doubled to around $330 billion in 2021. So, many industries may be seeing the same funding pattern as digital health. As capital investment grew, so did the number of digital health VCs that excitingly got their foot in the game with serial investments in early funding rounds. Consequently, Series A and B funding grew 38% and 23%, respectively. 

Digital health funding in 2022 may be more significant than in 2021. However, 2021 seems to have been the year of building, meaning 2022 will be the year of execution. I know which companies I have my money on.  

  • Is digital health in a bubble? 

Join the discussion


You Get a Test!

The Biden administration now requires insurance companies and group health plans to cover the cost of at-home Covid-19 tests. Increased access to testing will likely catch the virus early and prevent its spread. 

The Deets
The new rule requires insurers to cover eight tests per person per month. Insurers will have a list of preferred pharmacies where beneficiaries can pick up an over-the-counter Covid-19 test at no charge and without cost-sharing. However, if a beneficiary goes out of network, they will have to front the costs and file a reimbursement with the insurer, who must cover at least $12 of the cost. 

Insurers React
Insurers accept this new rule but have some concerns regarding the late notice, supply chain issues and foul players. 

  • Michael Bagel, director of public policy at the Alliance of Community Health Plans, said the rule is an “unfunded mandate on insurers and consumers” that gives insurers insufficient time to operationalize their processes.  
  • Blue Cross Blue Shield Association President and CEO Kim Keck worries the new rule doesn’t solve the actual bottleneck. That is, there’s a limited supply of tests, which increases scarcity and hikes up prices. 
  • Matt Eyles, president and CEO of America’s Health Insurance Plans, is prepared to work with the Biden administration to help mitigate price-gouging, fraud and abuse. 

My Take
From the public health point of view, widespread testing and widespread vaccinations can drive down cases. With increased access to testing, patients may detect the virus early and seek treatment sooner, which will drive down treatment costs. Likewise, detecting the virus sooner means patients can self-isolate to prevent its spread.  

Insurers will face significant expenses, especially since the Biden administration doesn’t seem to help them cover testings costs. For example, if we assume the average test costs $12 and insurers cover up to eight tests per month for all privately insured individuals, costs would total over $15 billion per month. I predict premiums will rise, but we need widespread testing now.  


Biogen’s Never-ending Saga

The Centers for Medicare and Medicaid Services (CMS) will restrict Medicare coverage of Biogen’s controversial Alzheimer’s treatment Aduhelm only to patients in clinical trials. Following the ups and downs of Adulhem has been entertaining. I feel the drug’s current trajectory, though, is downwards. 

Catch Up Quick
I talk about Aduhlem frequently, but a timeline will help you understand all that has happened: 

  • June ‘21: FDA approves Aduhelm despite medical panel recommending against its approval. Leading medical advisors resign in response to FDA’s decision.
  • July ‘21: FDA calls for a federal investigation into Aduhlem’s approval. FDA narrows drug’s target population to those with mild cognitive impairment. Prestigious medical centers like Mount Sinai and Cleveland Clinic announce they’ll not have Aduhelm on their formulary. 
  • Nov ‘21: CMS announces 15% increase in Medicare premiums, the largest-ever, likely due to expected Aduhlem coverage, which comes with a hefty price tag. 
  • Dec ‘21: Biogen slashes drug price in half from $56,000/year to $28,000/year after continuous complaints from hospitals (and much of the medical society) that the drug’s high cost was not worth its benefits.
  • Jan ‘22: Medicare restricts coverage of Aduhelm only to patients who take part in clinical trials. 
  • April ‘22: Medicare’s decision to be finalized.  

The Deets
Following a six-month review, CMS concluded that Aduhelm’s efficacy data is “insufficient” to suggest its use is “reasonable and necessary” for Alzheimer’s treatment. This decision is another blow to Biogen’s Alzheimer’s drug, which totaled just $300,000 in sales through September. CMS’s decision will undoubtedly continue to limit sales. 

A Win for Premiums? 
Now that CMS will unlikely cover Aduhlem, Medicare premiums which were to increase 15%, may now decrease. In fact, HHS Secretary Xavier Becerra ordered CMS to reassess its recommendation for Medicare premium. To be determined.


  • While more and more companies try to dip their toes into healthcare, IBM has decided they’ve bitten off more than they can chew. They again want to sell IBM Watson Health, and while the $1 billion ask seems high, it’s less than a quarter of what it cost them to build the company. 
  • Epstein-Barr Virus, most commonly known for causing mononucleosis (“mono”), might also be the most common cause of multiple sclerosis.
  • Vera Whole Health will acquire Castlight Health, combining the former’s network of providers with the latter’s digital technology, a deal valued at $370 million. One member of Vera’s board said, “this is a milestone for the healthcare system,” and I say, at that price, it better be.
  • Martin Shkreli, famous for his life-saving drug price gouging, was ordered to return $64 million in profits and never again participate in the pharmaceutical industry. Sorry, pharma bro.
  • In case you missed it, Humana shares saw their biggest drop in 13 years last week after cutting Medicare Advantage plan growth expectations in half. Humana’s CEO blames increasing competition offering unsustainably low prices.