Health IT Venture Funding For EMRs At Low Ebb

Posted on January 17, 2014 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. Contact her at @ziegerhealth on Twitter or visit her site at Zieger Healthcare.

For several years, most health IT venture funding has focused either on EMRs or data and network infrastructure to support EMRs.  With the EMR market arguably completely saturated, it seems the money is flowing in a different direction.

According to a new report by Mercom Capital Group covered in iHealthBeat, health IT venture capital funding hit  $2.2 billion across 571 deals in 2013, nearly double the $1.2 billion and 163 deals executed in 2012.

So where did the money go? According to Mercom, consumer-centric health IT companies raised $1.1 billion, personal health companies raised $198 million and social health companies raised $166 million last year.  The mobile healthcare sector raised almost $564 million, not surprising at all given the speed at which mobile health is accelerating.

Meanwhile, roughly $1.1 billion was raised by medical practice centric companies, including $179 million by population health companies, $162 million but practice management companies and a scant $166 million by EMR companies.

According to the report the top five venture funded companies of 2013 were Evolent Health, which raised $100 million, Practice Fusion, which raised $85 million, Fitbit, which raised $73 million, MedSynergies, which raised $65 million, and Proteus Digital Health, which raised $45 million.

So, as it turns out, Practice Fusion took the lion’s share of EMR venture funding last year, leaving the rest of the industry to scavenge for what remained in terms of VC interest.

What does it say in terms of the health of the EMR business?  Well, it’s not necessarily a sign of anything terribly negative in terms of EMR vendors’ future; after all, you’re not seeing a lot of new EMR companies jumping into the business, for good reason.

On the other hand, it does suggest that the market for EMRs has solidified, and is not perceived to have dramatic growth potential by VCs.  I suppose we shouldn’t be surprised or concerned for that matter. If EMR vendors aren’t in explosive growth mode at this point, it’s just because they’re serving the customers they’ve got. It could be worse.