LAS VEGAS–With more than 41,000 attendees, the Healthcare Information and Management Systems Society's annual meeting is one of the most important confabs of the year for technology vendors, both large and small.
And nowhere is it more evident than at the Sands Expo and Convention Center's exhibit hall that there's a gold rush going on in the digital health space. Healthcare innovation is attracting more interest—and funding—than perhaps ever before, but while there are a lot of hopefuls, only the most promising technologies are likely to stand the test of time.
“If you look at solution providers, there's a huge focus on what I'll generically call 'care management,' ” said Murtuza Mukadam, global head of healthcare strategy and solutions at Virtusa, an information technology consulting firm. “It's an area that needs to be solved. Is there room for 100 different vendors? Probably not.”
As a result, the sales cycle for digital health vendors may become even longer as providers and insurance companies decide where they want to put their money.
“Providers in general are in the experimental phase,” Mukadam said. “They're going to need to figure out what are the top priorities.”
San Francisco-based Dignity Health works with three to five early stage companies each year to help them grow from startup to commercial entity.
Rich Roth, the system's chief strategic innovation officer, said that when he walks through the exhibit hall, he's looking for companies that are able to scale and have an impact on healthcare delivery, "not to create the same wheel over and over."
"I think there are a lot of 'me toos,' " he said.
The field of digital health vendors also is likely to coalesce around a smaller number of companies that will be whittled down through mergers or acquisitions.
Despite the recent volatility in the equity markets, consolidation in the digital health space is likely to remain robust as the larger, more established companies look to add new technology solutions to build out their platforms.
“It's the niche providers that develop 'best of breed' technologies that the large enterprise companies can't develop themselves because they're not that focused,” said Jonathan Krieger, managing director at Berkery Noyes, an investment bank.
Still, he argued that the $3 trillion sector has room for multiple players. The move from fee-for-service to value-based payment models is pushing providers to free up additional capital to invest in new technologies.
“There's not going to be one winner,” Krieger said.