Venture capitalists increasingly are investing in health IT companies that use data analytics and care management applications to help health care providers rein in medical costs, Kaiser Health News/Washington Post reports.
According to KHN/Washington Post, investment in biotechnology and medical devices has declined sharply since 2007.
At the same time, investment in health IT firms has increased. Research from PricewaterhouseCoopers shows that health care software companies received $407 million in investments during the first three quarters of 2011, compared with the $311 million the sector received during all of 2007.
Investors might be betting that health care organizations squeezed by the recent recession are interested in IT systems that help them identify possible savings.
In addition, some investors might believe that the federal health reform law is increasing demand for companies that use data to:
Help insurers adjust to new regulations;
Increase health system efficiency; and
Offer Web-based tools to help people shop for health insurance.
Bob Kocher — a former health policy adviser for the Obama administration who now works for venture capital firm Venrock — said, “The changes in the health system are rocket fuel for entrepreneurs” (Weaver, Kaiser Health News/Washington Post, 11/6).
