New regulatory policies and digital transformation are growing the health IT market in 2015, which is making IPOs a more attractive option.
As investments in healthcare technology mature, and as investors look for ways to liquidate or gain late-stage capital, IPOs are growing at record levels, according to mid-yearmarket review by Healthcare Growth Partners.
Policy changes are turning healthcare into a model based on reimbursement for volume to one based on value, which is “dramatically expanding the addressable market, enhancing the value proposition, and de-risking business models for health IT in such a way that Wall Street and Main Street have taken notice,” the report’s authors say.
There were eight health IT focused IPOs in 2014, and there are seven already this year, according to the report.
Two of those include Teladoc, which went public on July 1 and started at $19 a share, and Fitbit, which went public in March at $20 a share.
In addition, the move from volume-based to value-based care is changing “the mix of publicly traded health IT companies,” the report says. Previously, companies focused on clinical and administrative documentation, but now they are aiming to create tools that transform information into value, according to the authors.
“The confluence of regulatory change, digital transformation, and capital forces are coming together like no other time in the history of healthcare. … [A]s these disruptive forces achieve scale, and most importantly, patients have the information to assert their power and demand change, our healthcare system will transform,” they say.
Another market report, by Rock Health, also points to IPOs as having a major impact on the industry.
In the first half of 2015, digital health funding has surpassed $2 billion, the Rock Health report says, and companies raised more money through IPOs than venture capital in the second quarter of 2015.
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