With 2022 coming to an end, there is increased interest—or is it trepidation?—in what the future of digital health holds. Will venture capital financing dwindle or will market liquidity increase in 2023? What alterations to laws and policies might we anticipate? How will telemedicine services and patient care be impacted by the termination of Public Health Emergency (PHE) waivers?
Nathaniel Lacktman sat down with the host of the Slice of Healthcare podcast on a recent episode. Lacktman is a member of the ATA Board of Directors as well as the Chair of Foley & Lardner’s national Telemedicine and Digital Health Industry Team. They talked about the current situation and what is to come, including how to create viable telemedicine models, what venture capital firms will anticipate from entrepreneurs in the digital health space, and the legal and regulatory developments that will take place in 2023.
The digital health sector, according to Lacktman, has “gone from a stage of growth-only to sustainability.” Venture capital firms are looking for a clear route to profitability rather than expecting businesses to be successful right away.
Keep in mind that venture funds typically have a lifespan of 10–12 years and a deployment timetable of 2–4 years. The limited partners’ contributions must be used to fulfil their contractual and fiduciary commitments, which require them to invest in telemedicine and digital health businesses. The billions of dollars raised over the previous three years have “a pile of dry powder (uncalled capital) remaining that must be deployed,” according to Lacktman. The lifecycle of a venture capital investment is rather long, and the investors’ money is relatively illiquid, the speaker added.
“Although venture sounds like it goes really rapidly, and it has in the recent years. Both the managers of the venture funds and the limited partners have distinct perspectives on time and the future. Founders themselves frequently have the greatest sense of urgency, notwithstanding the pressure that investors may exert. In the end, startups should feel secure knowing that there is money out there that has been already raised and set aside for investments in digital health. There is a lot of gasoline available to ignite additional growth.
The telemedicine industry was not founded by the epidemic or the PHE, but their effects did speed up the fast use of this technology. For the past three years, we have operated under so-called temporary waivers, many of which feel like they have become ingrained into the norm of medical practise. Just because a waiver expires won’t put an end to these fundamental developments.
Another thing to pay attention to is how the Ryan Haight Act would affect the way the Drug Enforcement Administration (DEA) handles telemedicine-based prescriptions for restricted substances. For some patients, prescribing controlled substances is their main form of medication-assisted therapy. The DEA has a responsibility to modify things for the patients who depend on this service.