As a sector, Israeli Digital Health has evolved over the past few years from being a vendor of technology with a cluster of innovative start-ups, into a mature, well-established and rich ecosystem – within which are many of the components required to drive the latest Digital Health phase.

During 2017, the Digital Health sector did really well, achieving record-high funding levels and larger deals, and while the overall number of deals slightly waned, there was a comparative increase in the number of late-stage deals. Continuing the trend, 2018 also began in a similarly positive upward direction, with Q1 already having been hailed as the largest quarter for Digital Health yet, after a whopping $2.8B was raised in funding across the globe.

This increase in funding is partly as a result of recent developments in the sector, as well as the impact these are expected to have on healthcare. This latest stage of Digital Health is the third phase of the sector’s development, which began more than a decade ago, in the projected hope of reforming healthcare by addressing and solving such challenges as rising costs, chronic diseases, the shortage of medical workforce and the prevention of medical errors.

The Changing Face of Digital Health

Initially, the solutions offered by the Digital Health sector focused on Clinical Workflow solutions, which digitalized medical data, and was primarily done by developing Electronic Medical Record (EMR) platforms. The Digital Health sector next focused on the gathering of information, using sensors and wearables, on the premise that this extra accumulated data would help improve patient-doctor interactions. It achieved this by upgrading the doctor-patient exchange to be conducted via digital media and by enabling the continuous monitoring of patients, rather than counting on episodic clinical interactions. However, it soon became clear that this incurred significant shortfall – while there was more information available on a more timely basis, the data itself was imprecise and even ambiguous, with no consistent analysis.

The aim of these first phases focused on making existing processes more efficient. The emerging stage of Digital Health is far more complex and ambitious, stepping out of existing systems into a new healthcare model, where the data collected is utilized meaningfully to improve clinical outcomes.

The Third Phase

The third and latest phase of the development of the Digital Health sector is a new healthcare model, at the heart of which is a network of information where the data is not only collected, but is also analyzed using advanced algorithms. From this analysis are extracted clinical insights, which are of paramount value to the appropriate healthcare system stakeholder, be they patients, doctors, hospitals, pharmaceutical companies, pharmacies, research labs, or insurance companies, or anyone else who falls within this category. The crucial element of this is that the insight is not only shared with the relevant stakeholder, but that this is done at the right time, utilizing the right data.

It’s also interesting to note that the data gathered is not only the current, potentially two-dimensional data that one might garner from a wearable device, such as heart rate, or sugar levels, for example, measured over a span of hours. Retrospective data is also gathered, enabling the essential context of a comprehensive picture of a patient’s healthcare requirements, which, when analyzed, can help predict the most accurate and effective course of action for an individual at the point of care. Furthermore, this significant and game-changing paradigm shift complements the global trend of consumerization of healthcare.

Israel – The Ideal Location for the Third Phase of Digital Health to Flourish

For the third phase to establish itself, it requires data analytics capabilities, data sharing practices and interoperability and above all, an effective approach to data privacy. All of the above are assets for which the Israeli Digital Health ecosystem is renowned, and below are just a few of the ways in which they are manifested through various subsectors of the Digital Health industry. 

Artificial Intelligence (AI): AI technology is one of the jewels in Israel’s crown. Given that there is much retroactive data within the Healthcare industry – several decades-worth of under-utilized information regarding patients and their needs – the capabilities that AI offers to retroactively mine data and extract information could significantly change the way in which healthcare is administered. Machine learning algorithms can take past data and use it to correctly project past events onto future likelihood, meaning that high-tech is helping healthcare move forward from a model of “let’s fix what’s broken” to one which is more precise, by being predictive and preventive.

Decision Support: The Digital Health subsector in which AI is most significant, Decision Support, is one of the building blocks of the third phase. By enabling vast quantities of data to be analyzed, the subsequent extraction of perceptive insights can predict the best course of action for any given patient and their specific situation and help medical professionals make informed and accurate choices. Decision Support went from being the second highest funded in 2017 to being the highest funded in 2018 H1, mirroring the world trend. Moreover, AI is attracting significant funding. 2017 saw funding of $165M (50% of total investments) and so far, 2018 has seen $129M raised (56% of total investments), which together account for nearly 50% of the number of funding rounds. Furthermore, AI technologies are also being developed quickly, with 45% of AI-using companies boasting fully developed products.

Assistive Devices: A further notable subsector of Digital Health is Assistive Devices. While it is a very small subsector of the Digital Health ecosystem, despite this, it performed extremely well. Assistive Devices is proving to be highly lucrative, bringing computer vision and machine learning to the B2C disabilities market, and demonstrating the enormous potential of the Digital Health domain when it is less restricted by regulatory and clinical barriers.     

Click here to download your copy of the Start-Up Nation Central Finder Insights Series Report: Israel’s Digital Health Industry, 2017-2018 H1 

Sharon Shapira manages the Digital Health Sector Strategy and activities at Start-Up Nation Central. An intelligence analyst in an elite IDF intelligence unit, Sharon was responsible for analyzing and processing intelligence in one of the unit's top divisions. She holds a BSc in Biotechnology (cum laude) from Tel-Aviv University.

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