11 April 2022 |

What’s Next for Digital Health?

By workweek

A new Rock Health report shows that digital health funding in Q1 2022 slowed down compared to the previous quarter. Is venture funding correcting itself from a prior funding explosion year?

The Deets

Q1 saw $6B in funding across 183 deals and an average deal size of $32.8M. Generally, Q1 isn’t a blockbuster quarter, but it usually beats the previous year’s Q4 funding. However, that isn’t the case this year—Q4 ‘21 saw $7.3B in digital health funding, $1.3B more than Q1’s $6B.

So, what lies ahead for digital health funding this year? Here’s what the Rock Health analysts had to say:

The rise-and-fall of Covid variants, energy shocks, and inflation numbers signal choppy waters for digital health investors, and Q1’s somewhat restrained (dare we say rational?) funding numbers may reflect investor caution.

I agree we’ll see less digital health funding overall, but I expect we’ll also see increased funding into previously overlooked clinical areas. Queue my next paragraph.

My Favorite Word: Workflow

While funding slowed for digital health overall in Q1, it spiked for companies streamlining clinical workflow (read: making clinicians’ day-to-day more efficient and effective). Clinical workflow companies brought in $888M in funding. Last year, this digital health area wasn’t even on Rock Health’s radar! Clinical workflow funding rose eight spots to third place among the top-funded value propositions.

I obsess over clinical workflows, and my Master’s in healthcare systems engineering is likely to blame for that. During my program, I actually worked with fellow Huddler Jonny Blum on a startup that automates waiting lists for offices (because who wants to wait months for an appointment when patients are canceling appointments every day?)

Anyway, I digress. Clinical workflow companies are going to skyrocket because they’re clinician-focused. Clinicians are the main stakeholder in providing patient care, and seldom are companies working on how to make their lives easier. So far, companies have been quite patient-focused, leaving the doctor out of the picture. The shift in focus on the clinician will be interesting to watch, and some companies like DeepScribeMemora Health and Decisio Health are already focusing on them.