Digital Health Trends That Will Continue in 2021

Despite the uncertainty fueled by the anticipated pandemic at the beginning of 2020, the healthcare innovation ecosystem experienced unprecedented growth by year-end. Closing the year with $17B investment dollars going to digital health startups according to Silicon Valley Bank (up from $10.7B in the previous year), 2020 proved to be a record-breaking year for healthcare technology. Healthcare technology companies, insurers, life science organizations and health systems found themselves moving at ground-breaking speed in order to keep up with the demands brought forth by the pandemic.

2020 also showed strong alignment between investors and buyers of digital health. Historically, we've frequently seen investors focus on trendy, fashionable themes and fund the startups building products in those markets. However, these products often lack product-market fit when put in front of consumers and healthcare organizations, and in 2020 we saw a great overlap between areas of interest to investors and areas of need for buyers.

As we kick off the new year, we reflect on the types of digital health that experienced rapid adoption and growth in 2020 and identify ones that are positioned for continued growth in 2021.

1. Behavioral health solutions

The surge in demand for behavioral health and services was met by a $1.8B investment into digital mental health solutions in 2020 — a 300 percent increase as compared to 2019. The need for mental health solutions like teletherapy, meditation apps and self-directed care tools shows no signs of slowing down in 2021 as the incidence of mental health illness in the U.S. continues to be at an all-time high.

2. On-demand healthcare

The most funded category of digital health in 2020 was on-demand-healthcare — capturing $2.7B in total funding, as reported by Rock Health. The pandemic served as a catalyst for on-demand, virtual care solutions. From video telemedicine platforms to AI-powered tools that streamline care, healthcare organizations rapidly leveraged third-party and homegrown tools to meet the increased demand for access to 24/7 care. In 2021, patients will increasingly demand better web and mobile solutions for on-demand care with user experiences that rival retail apps in their convenience and intuitive design.

3. Digital therapeutics

In 2020, the FDA approved, for the first time, prescription-based digital therapeutics that were software programs, including Pear Therapeutics and  Akili.  These technology solutions provide therapeutic intervention for the treatment of mental and physical health conditions. As the industry wades through reimbursement and regulatory considerations, healthcare providers continue to increase their adoption of these solutions as part of treatment plans for conditions ranging from substance abuse to IBS. 

4. Virtual and augmented reality

At the beginning of 2020, most organizations were struggling to roll out and scale video telemedicine solutions. Today, organizations are adopting next generation solutions like VR and AR for healthcare. Health systems and medical teaching institutions are leveraging these consumer-driven technologies for treating patients and training physicians. Behavioral health has seen the greatest adoption of AR/VR solutions such as simulation therapy for mental health disorders. Similarly, investors continue to pour dollars into this global market which is expected to see a CAGR of 41.2 percent from 2020 to 2027, according to a recent report by Verified Market Research.

5. Remote monitoring and testing

The pandemic demonstrated what happens to our healthcare system when large populations of patients suddenly seek acute care. Wider access to and adoption of remote diagnostic and monitoring solutions would have been a game-changer in keeping healthy patients at home and identifying sick patients sooner. In 2021, we will see an increase in remote diagnostic devices such as pulse oximeters. And after witnessing the negative impact of decreased access to in-person care for chronic disease patients, provider and insurer organizations will also increase investments in long term remote monitoring solutions for these vulnerable populations.