Trying to find the latest in digital health innovation? Don't bother checking out the traditional healthcare hubs like Boston, Los Angeles or Chicago.
Look to areas where "advanced industries" like computer systems design, R&D and engineering services are thriving – places like California's Silicon Valley, San Antonio, Nashville and St. Louis, for starters. That's where the innovation – and venture capital attention – is focused.
That's the gist of a new Brookings Institution report on digital health investment, and it paints an interesting picture of how healthcare's landscape is being shaped by those outside the industry.
[See also: mHealth startup VC funding skyrockets]
Brookings researchers point out that the U.S. healthcare system is "profoundly inefficient," and currently accounts for almost 17 percent of the nation's gross domestic product. And with demand for healthcare growing, particularly among an aging population that wishes to stay active and at home, it's pressuring both government funding and the workforce, to the point that America can neither properly staff nor pay for the healthcare services it will need.
And of course Americans aren't getting any healthier. The U.S. ranks 26th out of 40 nations in the developed world in life expectancy at birth, 32nd out of 37 in adult diabetes, 22nd out of 33 in ischemic heart disease mortality, 35th out of 40 in childhood obesity and last in adult obesity.
That's where new technology comes into play.
"Technology is already providing an important role that will increase as a means to confront these challenges," the report states. "Venture capital activity in digital health has increased substantially in recent years and is absorbing a larger share of total deals and dollars invested in the United States. Digital health companies are no longer in their infancy but are already generating significant returns to both specialist investors and broader venture capital firms - signaling a sector that is moving from proof-of-concept to higher rates of expansion and implementation. Exit activity - public offerings and mergers and acquisitions - has also grown significantly in recent years."
The advent of digital health technology – mHealth and telehealth in particular – offers some hope for reducing waste (PricewaterhouseCoopers has estimated that half of the nation's healthcare spending is wasteful) and improving outcomes. And that's seen in the marked increase in venture capital funding and so-called digital health deals. But Brookings finds that while regions with large, established healthcare networks are getting their fair share of VC activity, those smaller, more technologically advanced parts of the country are seeing a lot of funding as well.
[See also: Google's Alphabet could give mHealth more freedom]
In other words, healthcare innovation isn't necessarily coming from Boston or Dallas or Denver, but in the Research Triangle, Minneapolis, Cleveland, San Diego and Tampa, where businesses focused on creative technology and thinking are dominant. As well, they're better funded, more apt to take risks and relatively unhindered by legal and legislative constraints that tend to keep healthcare innovation at bay.
Whether those innovations make it into the healthcare marketplace remains to be seen.
"Only time will tell if digital health companies will fulfill their promise of increasing the quality and efficiency of healthcare," the Brookings report concludes, "but there are promising signs that they will at least make a significant contribution."
