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Is health IT going to drink medtech’s funding milkshake?

February 21, 2017 By Chris Newmarker

milkshake medtech funding health IT

[Image courtesy of Clive Darrow on Flickr, per Creative Commons 2.0 license]

Healthcare companies in the U.S. midwest last year brought in $1.7 billion in investments—an amount that came within $60 million of the all-time record set in 2014, according to the BioEnterprise Midwest Healthcare Growth Capital Report.

Medical device companies took in the largest chunk of money, raising $696 million, or 40.3% of the total. But much of the funding boost came from health IT and software and services companies, which were a close second with $679 million raised, or 39.3%.

Minnesota—which has one of the largest medical device hubs in the United States and is home to Mayo Clinic and UnitedHealthcare—had the greatest share of the money raised: $424 million. Illinois came in second with $327 million—with $200 million of the total going to Accretive Health, which provides revenue cycle management to hospitals. Ohio was third with $291 million.

“Midwest healthcare continues to perform at historic levels,” Aram Nerpouni, president and CEO of Cleveland-based BioEnterprise, said in a news release. “From 2015 to 2016 we saw an 11% increase in investment and an 19% increase in companies raising that investment. Within the past five years (2011-2016), the number of companies raising money, and the amount raised, has more than doubled.”

Health IT and services are increasingly becoming a target for investors, according to Nerpouni. In fact, the largest money raises last year involved health IT/software services companies. Coming in second behind Accretive Health’s $200 million money-raise was another health IT company, Minneapolis-based Bright Health, which is seeking to simplify the health insurance experience.

“Although the Midwest continues to be a stronghold in medical devices, investment in health IT and services increased 34% from 2015 ($450 million) and is essentially on par,” Nerpouni said.

In contrast to the BioEnterprise report, the PwC/CB Insights MoneyTree Report shows U.S. healthcare companies raising $58.6 billion in 2016, down from $73.4 billion in 2015.

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