Medicaid madness

If you’ve been following the news, you know the US healthcare system may undergo some surgery. Today we’ll look at two areas of possible impact for digital health from upcoming regulation: the NIH and Medicaid.

The role of NIH grants

The new administration is talking about cuts to government programs, including an ~18% cut to the National Institutes of Health (NIH). While more focused on biotech/life sciences, this still has an impact on digital health as well. We took a look through our digital health grant data from the NIH to understand some of the ways digital health grants are used (you can see them on our platform with this deal search). Here are some ways the NIH plays a role: 

• NIH grants provide non-dilutive financing. This can be especially important at the early stages in a company lifecycle when the risk is highest and the return horizon is the furthest out, a scenario where investors might be less willing to invest.
• The NIH funds labs and universities, many of which provide the resources that result in new digital health initiatives (for example, the University of California San Francisco developed several digital health initiatives through its Center for Digital Health Innovation and is a large receiver of NIH grants).
• The NIH can provide legitimacy to emerging technologies. For example, AiCure uses artificial intelligence to improve medication adherence and touts the NIH funding on its site.
  
• The NIH funds studies to demonstrate the efficacy of certain programs and technologies. Omada Health’s diabetes prevention program is based off of an earlier study funded by the NIH.
• Many companies use grants to round off their funding targets. Owlet has raised multiple grants alongside its recent funding rounds (snapshot from our platform).
  
• Companies can use grants in periods of uncertainty. For example, 23andMe raised a $1.5M grant in between its FDA crackdown and FDA clearance.

There are probably even more ways the NIH impacts the ecosystem, so cuts to this department could make a difference. If you have your own particular story about the NIH let me know.

Medicaid Madness

One of the provisions in the upcoming replacement bill for the Affordable Care Act involves reducing Medicaid expansion and could shift states to receiving lump sums for the program. This puts startups targeting the Medicaid population in the spotlight, so we highlighted 9 companies targeting this space from population health to streamlining documentation and many things in between.

Stay healthy,

Nikhil
@nikillinit