In 12 remote patient monitoring deals this year, venture capitalists put a total of $102 million into RPM companies, reports Rock Health, a seed fund for digital health. Why the focus on remote monitoring technology? Investors are betting that new federal requirements and changes in how doctors get paid will force hospitals to buy more gadgets to help watch over and care for patients outside the hospital setting.
The Affordable Care Act is expected to push more medical billing from the traditional fee-for-service model to the new fee-for-performance model; in other words, hospitals will get paid to keep people healthy. Keeping people healthy will force healthcare providers to do things such as prevent readmissions back to a hospital for an infection or relapse after a treatment, or keep people from needing a hospital stay at all. And that will happen only if providers have some insight into what patients are doing at home.
"Patient monitoring is becoming a necessary measure for hospitals and doctors to measure their business," said Jack Young, head of Qualcomm Life Fund, a wireless health investment company. "The focus is shifting whether they like it or not."
The theory is that better chronic care management will keep costs down. If patients can manage conditions such as diabetes and heart disease better outside of the hospital, costly major medical episodes are less likely to occur.
Remote patient monitoring companies are popping up left and right in the industry because it's relatively cheap to enter the market. Wireless transmission of data and sensors to collect data aren't new developments -- venture capitalists are getting interested now because new payment models are creating demand from providers.
"The technology has existed for years," said Promod Haque, a senior managing partner at Norwest Venture Partners, which invests in health IT companies. "This isn't new innovation. It's about new applications."
In 2010, the Affordable Care Act required the Department of Health and Human Services to establish a readmission-reduction program. Remote patient monitoring done right could significantly reduce the likelihood of readmission by heading off small problems before they become critical.
"It's in the best interest of hospitals to prevent readmission, so we're seeing a flurry of funding, especially as the ACA is really starting to take hold," said Paul Sonnier, head of digital strategy at Popper and Co., a healthcare consulting firm.
Remote patient monitoring faces some big obstacles. Older patients might be unfamiliar with the technology, and people of all ages still have to be persuaded to use it. There is little standardization among the devices because of the number of companies in the market, so IT faces an integration headache getting them to work with existing electronic records.
Another obstacle is that regulators view some monitoring apps the same as medical devices, and so they need Food and Drug Administration approval for use in clinical settings. Providers also need to figure out how to use all the data collected. For instance, how to automate the analysis to alert a nurse or doctor at the right time to follow up, but not so often that clinicians are overrun with warnings?
But venture investors are used to such risks with emerging tech and are sure there's money to be made as a few remote monitoring companies grow large enough to "emerge as victors and go public," said Hague.
Looking at the types of remote patient monitoring companies that venture capitalists are funding offers a window on where the technology is headed. Here are nine remote patient monitoring startups that have received new venture capital funding within the past year.