There may be a debate about whether digital health is in a bubble but there appears to be areas within health IT that are safe.

Three investors pointed to artificial intelligence, telemedicine and behavioral health as the no. 1 area of interest for investment this year. All three — Melissa Daniels, a managing director with Morgan Stanley Capital Expansion; Greg Yap, a partner with Menlo Ventures; and Yumin Choi, a partner with Bain Capital Ventures — were speaking during HIMSS at the Health 2.0 VentureConnect event on Wednesday.

First up Daniels from Morgan Stanley, which invests in late-stage companies.

“I think where we are spending a lot of time is telehealth and remote monitoring just because of reimbursement advantages,” she said.

Daniels also expanded upon why she views telemedicine and remote monitoring as the most attractive to her.

As an investor the toughest thing for me with digital health and healthcare IT is the hype and valuation expectations of companies that have added a small amount of success. So at times for this sector, I spend time looking at things that are not in the sexy areas of what’s new and novel in digital health. To me digital health is all about moving out of the traditional care settings to the least-cost alternative. So last year, I spent a ton of time looking at home care.

She added that she will continue to invest in home health this year.

If Daniels is looking for non-flashy areas of health IT and digital health that get the job done, Yap from Meno Ventures is very interested in something that is very buzzy right now: artificial intelligence. But he was careful to imply that AI has real practical applications as opposed to AI-will-replace-doctors theories that may be driving some people.

“This is the year for artificial intelligence in healthcare,” he declared. “It’s been coming for a long time and I think every year has been the year for it but I think this is the year that you see it enter into real, clinical practice.”

More specifically AI applications in radiology primarily, but also in pathology and triage will come in use.

“What AI needs is good datasets; you need good training data,” Yap said, which had been lacking until recently. “I think big technology companies will take vertical slices out of that …and the data will become large enough for AI to be used in the way it was intended.”

Instead of AI replacing doctors, it will AI augmenting them, removing the inefficiencies that often hamper good care.

For Choi of Bain Capital Ventures, 2019 will be about value based care applications and more specifically behavioral health. Bain Capital will makes $100,00o invests all the way to a $100 million, Choi said.

“I look at a lot of companies that are broadly categorized as specialty care,” he explained. “They sit in the middle of the patient, provider and care.”

These companies are really responsible for coordinating care and “within that sub sector, I am particularly excited about behavioral health.”

He added that it’s still early days for this area.

“Payers, employers are now starting to understand mental health equates with health spend,” he said.

So there you have it — AI, telemedicine/remote monitoring and behavioral health are what is exciting to these VCs in 2019.

Photo: Abscent84, Getty Images



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