In the 4th quarter of 2021, Dreamit Ventures surveyed 14 healthcare IT directors and innovation leaders to understand how healthcare organizations are adapting to the new sustainable pandemic norm. Participants included leaders in innovation from systems ranging in size from 250 beds to more than 1,000. Among the systems surveyed were Los Angeles Children’s Hospital, Moffitt Cancer Center, Atrium and Philadelphia Children’s Hospital, among others. The survey was geographically diverse and reflects some significant changes in how health systems now interact with startups.
As the Covid-19 pandemic continues to strain healthcare organizations across the country, healthcare executives have said they are looking for innovative solutions to address crisis-exacerbated pain points as well as new models of care. This includes doubling improved patient experiences and access to virtual health, as well as solutions to reduce extensive burnout of physicians and shortage of providers. However, only solutions with a clear return on investment that are integrated into the EHR and existing workflows are seriously considered.
“Solutions that create a better and more engaging consumer experience are more important than ever,” said Todd Dunn, vice president of innovation at Atrium Health. “However, they should deliver measurable business and clinical results. The burden of proof has never been higher. ”
Despite tougher criteria for adoption, digital healthcare companies are receiving record levels of investment. According to CBInsights, U.S. funding for healthcare startups reached $ 37.9 billion, the highest ever figure. Globally, digital health funding was $ 57.2 billion, with a 3-fold average increase in late-stage valuation and a lower average time between fundraisers in the growth phase.
But can these startups, which are aggressively funded, allow for rapid growth assumptions that are commensurate with that level of funding? Only time will tell, but any experienced investor in HealthTech knows that “rapid scaling” is an axiom when selling to corporate health systems, providers and payers.
There are many positive signals. IT budgets are gradually recovering. While 2020 was characterized by frozen and reduced IT budgets, in 30% of surveyed health systems in 2021 the budget for health technology increased compared to 5% in our 2020 poll. While 25% of respondents in 2020 reported frozen budgets, only one system reported that its IT budget was frozen in 2021. It is clear that larger budgets will have a positive impact on startups.
From 2020 to 2021, the greatest interest was in mental and behavioral health (50% to 92%), operational efficiency (64% to 92%), as well as work processes and burnout of suppliers (20% to 62%). . The emergence of social determinants of health and inpatient care at home are also areas of increasing interest from health care organizations. Our experience with our national network of health professionals shows that new challenges have created a strong appetite for innovation. The outlook is positive for platforms that address many of the emerging challenges that arise in the fire.
However, an additional challenge for startups in 2022 is the limitations of human resources and IT bandwidth. 80% of respondents report that IT costs, power constraints and other EMR integration issues create problems in working with Healthtech startups.
“Bandwidth for timely implementation remains our biggest challenge in working with startups,” said the Director of Innovation, a major integrated healthcare system in the Central Atlantic.
“It is especially difficult to launch pilots right now, given the heavy burnout burden faced by health personnel as we approach the third year of the pandemic,” said the innovation leader at a major children’s hospital in the northeast. “And this, combined with our constant shortage of staff, makes interacting with new technology solutions even more difficult.”
Throughout, CIOs report the need to balance the challenges they face and the risks associated with partnering with a startup.
“We are very interested in working with startups, but we also need to think about long-term planning,” said the senior executive of the mid-size innovation system in the Mid-Atlantic. “Startups pose a high level of risk, which makes it difficult to ensure that long-term plans work and that solutions meet our needs.”
As the pandemic enters its third year, our survey shows a strong future for digital healthcare companies that address pressing issues, provide demonstrable return on investment, and improve provider workflows. The motivation to solve these problems is always high. But estimates are frothy, and it’s safe to say that many startups just won’t go for cuts, given the expectations of directors of healthcare information company campaigns. In a few months it may seem like both the best and the worst times.
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