There’s good news and bad news for digital health care startups, according to a report by consulting giant Accenture. The bad news is that half of them will fail within their first two years of existence. The good news is that even startups that don't make it can help develop the skills of talented entrepreneurs and workers, whose ideas can be of use to bigger companies.

The report estimated that $2.5 billion will be invested in health technology start-ups during the next two years across the following segments:

engagement (25 percent),
treatment (25 percent),
diagnosis (21 percent)
and infrastructure (29 percent).

In the traditionally conservative realm of health care, many big players are starting to recognize that acquiring startups is a good way to inject their companies with some much-needed innovative spirit.

“Many digital start-ups that are dying or in danger of failure have developed solutions that can help traditional and non-traditional health care companies achieve their goals,” said Kaveh Safavi, managing director for Accenture’s global health care business.

The report is based on an assessment of health startups founded between 2008 and 2013. Of the nearly 900 startups Accenture examined, just over half had received less than $50 million during the timeframe and had not acquired any money in at least the past 20 months.

Accenture designated such companies "zombies," ripe to be bought at a low cost and plundered for whatever talent or products they have developed. Whether through potential leaders or the intellectual property rights to a new device that hasn't had enough money behind it to truly flourish, zombies can be a big asset for health care companies, the report says.

"From wearables/nearables and telehealth to remote monitoring and on-demand services,” the report states, “innovative market offerings are diverse and potentially game changing for health care providers, payers, patients and even non-traditional health care stakeholder."

Instant Insights /

Half of digital health startups will fail in first 2 years

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