These are dark days for health tech startups.
Funding for U.S. digital health startups is in the midst of collapse, falling to $3 billion in the third quarter of 2022 from more than $11 billion in the fourth quarter of 2021, according to CB Insights, a market research firm.
Venture capitalists are pulling back on investment because of recession fears and rising interest rates, threatening a period of stasis in medical innovation, Ben and Ruth report.
The carnage among startups is vast. Some examples include:
- Ro, which during the pandemic expanded into online primary care and scooped up a bevy of at-home testing startups — including Modern Fertility, Dadi and Kit, as well as at-home-care software startup Workpath — laid off 18 percent of its workforce over the summer. CEO Zachariah Reitano told employees the firm needs to narrow its focus.
- Carbon Health let go of 8 percent of its staff in June. CEO Eren Bali said in a blog post that the primary care firm could no longer rely on investors and needs to turn a profit.
- Wheel cut 17 percent of its workforce in August. The Austin, Texas, firm is shifting gears. CEO Michelle Davey said in an email to staff that it needs to expand beyond its business of providing messaging, scheduling and payment services.
Telehealth recedes: During the pandemic, virtual care took off as people sought to avoid crowded doctors’ offices and hospitals.
But now that Covid fears have declined, so has telehealth use, even though it’s still well above pre-pandemic levels.
So companies that are leaning away from telehealth and into software are finding investors.
Biofourmis, which makes products to help doctors monitor patients’ conditions at home, raised $320 million at a $1 billion company valuation, according to data research company PitchBook. Another company, Reify Health, which makes software that connects doctors with clinical trials, raised $220 million at a $4.6 billion company valuation in April.
No rescue: The sector can’t look to Washington, D.C., for relief. The Federal Reserve remains committed to more rate hikes to tamp down inflation. And a divided Congress is set to take power in January. The incoming Congress is less likely than the current one to agree on legislative remedies.
Help could come at the margins if Congress extends public health emergency rules allowing people to access telehealth more easily.
This is where we explore the ideas and innovators shaping health care.
Can technology help keep an eye on patients and lighten health care workers’ load? Some mental health hospitals in the United Kingdom are testing infrared cameras to track patients’ vital signs in order to find out, the Financial Times reports.
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Today on our Pulse Check podcast, Katherine Ellen Foley talks with Krista Mahr about why RSV, or respiratory syncytial virus, in children is worse this season compared with previous ones as the surge in caseloads fills pediatric hospitals.
Carmen caught up with Rep. Chris Smith (R-N.J.), the presumptive incoming chair of the Foreign Affairs Africa, Global Health and Human Rights Subcommittee now that Republicans have secured the majority.
He filled her in on his 2023 priorities:
- Reauthorizing PEPFAR. The President’s Emergency Plan for AIDS Relief “has been a lifesaver beyond words.”
- Promoting childhood vaccinations, including against polio. “We have to make sure that [is] sustained or these things will come back, and will come back with a vengeance.”
- Passing the Global Brain Health Act. Smith says he’s been trying to get the act passed for 15 years. It promotes research on autism, Alzheimer’s and hydrocephalus, a buildup of fluid in the brain.
Developing countries lag in access to treatments for brain diseases, Smith said.
“I had hearings on autism — and unfortunately, if you have a diagnosis — which you don’t usually get in Africa and other developing countries, you’re just left out. There’s no early intervention,” he said.
He added: “I want to grow grants to [nongovernmental organizations] and governments to build up capacity for early intervention but also share everything we’re doing at NIH and CDC.”
Despite the billions in venture funding flowing into technology in recent years, the U.S. health care system “has very little to show for it,” the American Medical Association and consulting firm Manatt Health say in a new report.
The AMA and Manatt suggest that new technologies and health care can be integrated by:
— Making pandemic-era telehealth policies permanent
— Bolstering funding to build out and research digital health care models and strengthen broadband access
— Urging state lawmakers and regulators to make “narrow exceptions” that would let doctors provide care virtually across state lines.
Technology and policy need to break down fragmentation that limits tech’s potential across providers, the AMA and Manatt argue, and roll out evidence-based models more quickly.
“Bridging the digital health disconnect will take time, resources, policy redesign, and a commitment by all stakeholders to build care models and companies differently than we have in the past,” the report said. “This will be the next great challenge in health care delivery and will progress iteratively.”