Incentivizing the Digital Health Revolution

According to venture capital fund Rock Health, private investment in digital health startups in 2014 was $4.3 billion, a 125 percent increase from the previous year, easily surpassing investment in what is considered traditional healthcare and technology sectors[i]. In order for consumers to more quickly benefit from efficiencies brought on by digital health, states should consider strategies to allow new products and services be easily integrated into models of care.

An example of the possibilities digital health will bring is currently being developed by Silicon Valley startup Cofactor[ii] whose researchers are working to replace the inconvenience of facilitating a standard blood test through finger prick technology. The device will provide consumers a truly personalized experience: purchase a device at your local pharmacy (for under $10), prick your finger, then the results of your blood test will be text messaged to you and/or your provider within a few hours. If successful, Cofactor’s product could wholly replace the blood diagnostic industry as we currently know it.

To encourage digital innovation such as Cofactor’s, elected and agency officials can offer a framework of opportunity for the private sector to consider when investing. Vehicles for investment can include angel investment tax credits and industry-specific grant and loan programs, which will provide incentives that should help continue the current rise in investment.

Regulations governing reimbursement for product categories should be general enough to allow for trial of new devices and treatments, removing a barrier to entry. On the delivery side, a review of Medical Board licensing as it relates to Telemedicine, and also providing market incentives for training and education for providers to encourage them to keep up with health IT products as they are released to market.

It is not likely any level of government will be able to keep up with rapidly changing technology. However, by implementing a framework that will make room to adopt new products and services will allow beneficiaries to experience higher quality of care at the pace new technologies come to market.

[i] Rock Health: Digital Health Funding Year in Review, accessed 09/14/2015

[ii] Medical Testing is So Hot Right Now. This Startup Wants In by Nina Stockton 09/04/2015


In Depth: Innovation

Whether improving processes, creating products or developing new ideas, the application of technology can enable real changes in how state government works, both in quality of services delivered to constituents, cost savings and quality of life. States have the opportunity in our national balance of government power, to address policy…

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