Venture capital investment in healthcare IT sees significant increase

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Investment of venture capital funding to the healthcare IT industry has increased substantially, according to Information Week.

Data from Dow Jones VentureSource indicates that $633 million was invested in healthcare IT companies and projects in 2011, the highest figure since 2001. This represents a 22 percent increase from the $520 million reported in 2010. The healthcare IT sector saw investment of $329 million in 2009, indicating that many investors see the industry as ripe for innovation and continued development.

A report commissioned by Dow Jones VentureSource suggests that 61 percent of chief executive officers and venture capitalists believe investment will continue to increase throughout 2012. Dow Jones polled more than 500 professionals and executives within the healthcare industry to arrive at its conclusions.

“Private equity firms oversee $3 trillion in global assets and due to the global economic challenges, 30 percent of that is sitting on the sideline waiting to be invested,” Jon Krieger, managing director in Berkery Noyes’ healthcare and life sciences group, told Healthcare Finance News. “A lot of that money is going into the U.S. healthcare IT market to capitalize on current adoption trends and above market growth rates.”

The news source reports that many investors see healthcare IT as a lucrative market due to the increasing automation of processes in clinical environments and the continued adoption of healthcare IT infrastructure, including medical informatics technology. Many analysts and experts believe that despite continued development and interest in medical technology companies, there is still room for significant growth in the market.

The focus on healthcare IT implementation has been driven in part by the Obama Administration’s financial incentives, such as the Center for Medicare and Medicaid Services’ meaningful use initiative.