How the Digital Health Investment Slump May Affect Hospices

Declines in digital health investment have implications for hospice and palliative care providers.

The digital health investment boom, accelerated by the pandemic, is on the decline, at least for now. The term “digital health” can be defined broadly, according to Dr. Arif Kamal, associate professor of medicine and population health at Duke University. It can include electronic medical platforms, telehealth solutions, data analytics, and remote patient monitoring, as well as a host of others.

These kinds of technologies have been proliferating through the hospice and palliative care ecosystem for several years to identify patients in need of their services, increase touch points without additional employee travel, reduce the burden on staff, build efficiency and, more recently, prevent the spread of COVID-19.


“I think there is actually a disease-based care innovation that’s happening that palliative and hospice should be familiar with, because we’re going to increasingly be a part of the supportive care apparatus to realize a future that looks more decentralized,” Kamal told Hospice News. “Then I think the other thing is really looking at the scalability of the work that we do, recognizing that there is a limited workforce and an increasing demand for the expertise that we have.”

Investors poured heaps of money into digital health in 2020 and 2021, but this year they are clutching their purse strings a little tighter.

Investment in the sector topped $29 billion in 2021, via 729 deals, according to a report by the venture capital fund Rock Health, but thus far 2022 is not keeping pace.


Digital health startups brought in $6 billion in investment during Q1 2022, a drop from $7.3 billion in the fourth quarter of last year, Rock Health indicated in a separate report.

Q2 saw further declines. Global digital health funding fell 32% sequentially from Q1, according to CB Insights.

To some extent, the market may be normalizing after outlier years driven by pandemic.

“Digital health companies got a lot of traction, and a lot of excitement by investors, particularly during the time of COVID, when everybody was at home, and really the only access to care for a lot of different specialties in different populations was digital health,” Chris Booker, partner at the Nashville-based investment firm Frist Cressey Ventures, told Hospice News. “So what you’re kind of seeing is almost a normalization of those elevated investments and elevated valuations back down to more where other industry enterprise values and investments throughout other sectors are at this time.” 

Another factor in the space is rising interest rates, according to Booker.

The U.S. Federal Reserve has signaled its intent to continue raising interest rates to achieve greater “price stability,” according to remarks by Chairman Jerome Powell. In the minds of many in the economics world, rate increases signal an impending recession — though this is not necessarily the case, according to a recent Deloitte Global Economist Network analysis.

Rising interest rates can have a dampening effect on company valuations and the cost of raising money or pursuing acquisitions.

Hospices may be somewhat insulated from the digital health downturn due to the ever-present need for in-person services, Booker said. Nevertheless, they could feel effects, particularly when it comes to increasing virtual contact with patients.

As more care has moved into the home during the past two years, telehealth has become a more important tool with game-changing implications that extend beyond the pandemic. This has been of particular importance in rural areas in which clinicians travel long distances. 

“As the physical location where these patients are receiving care has shifted more into the home instead of institutional settings, there’s going to be a need for more connectivity, and that’s where digital health was starting to play a bigger and bigger role,” Booker told Hospice News. “And I’m worried that there may be a reduction in these whole modalities of investment in digital health.”

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