Investors bet big on apps that promise to improve health — and cut costs
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OAKLAND, Calif. — A surge in venture funding for startups working on health apps has sparked a flurry of interest in smartphone tools that help doctors diagnose, monitor, and treat patients from afar.

Venture funding for the industry held steady last year at $4.3 billion, matching the record-breaking investment totals for 2014, according to Rock Health, a Silicon Valley investor that specializes in digital health companies.

Consumers still haven’t completely embraced the category, in part because of concerns about the security and privacy of their health data. Just 17 percent of American adults use a health-tracking app, and just 12 percent own a wearable device to monitor health or exercise, according to a Rock Health survey last summer of 4,000 adults with Internet connections.

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Telemedicine — getting care from a doctor at a distance — hasn’t caught on widely, either; only 7 percent of respondents said they’ve used video-based technology to communicate with their doctors, though more than a third were willing to try it.

Though adoption has been slow so far, analysts see a lot of potential, as consumers become more comfortable with the concept of online medical care. The National Conference of State Legislatures recently estimated that 3.2 million patients will use telemedicine services by 2018, compared with only 250,000 in 2013.

And Greg Caressi, an analyst with Frost & Sullivan in Mountain View, Calif., predicted this will be a big year for providers to adopt data-analysis tools that help them make sense of health information recorded by patients’ apps. Some physicians see the new digital health tools as a key to recruiting new patients and boosting their revenue.

One key to growing the market? App developers must “learn tricks to deepen user engagement levels and prove to their customers that apps can influence consumers’ health choices,” said Harry Wang, an industry analyst with Parks Associates in Dallas.

Here are a few products that have drawn robust support from investors and patients:

CellScope

Any parent knows that sinking feeling: Your toddler is feverish, crying, and seems to be pulling at her ear. A $79 device that attaches to your iPhone will let you take high-resolution photos of the inside of her ear. For another $10, you can send the pictures to a doctor for an online consultation. The device and app (which can also be used to get online advice about skin rashes) both come from CellScope, a startup whose founders came out of a University of California, Berkeley, engineering lab.

Grand Rounds

Need a second opinion? Grand Rounds, accessed from an iPhone or Android app, operates like an electronic medical concierge. It can arrange a visit with a doctor in your area who accepts your insurance, or set up an electronic consultation with a specialist.

The company claims that it works only with top docs, including Dr. Richard Hodin, chief of endocrine surgery at Massachusetts General Hospital, and Dr. Laura Esserman, chief of breast care surgery at the University of California San Francisco School of Medicine. The app also connects you with case managers who coordinate care and specialists who collect, digitize, and encrypt your medical records for future use.

Employers have started subscribing to Grand Rounds for their employees, on the premise that it will cut overall health care and insurance costs by eliminating unnecessary care.

Glooko

Anyone with diabetes understands the endless, vigilant management required. Glooko’s app helps manage all that information. It downloads blood sugar readings from meters and insulin pumps, lets you add food intake and exercise stats from Fitbit and similar devices, and assesses those data over time, even sending you snack and medicine reminders. The program includes more than 200,000 food items from restaurants and stores for easy input.

Glooko lets you share the app’s reports with your health care provider, who can then use a separate app to track your progress or flag potential problems. The company charges providers and offers the product free to patients.

Omada Health

Omada Health offers a 16-week course intended to reduce your risk for heart disease, diabetes, and obesity. Called Prevent, it’s available via computer, smartphone, or tablet.

The program features games designed to reinforce healthy eating and lifestyles; includes digital scales, pedometers, and exercise equipment; and provides an online peer group for social support. Omada also supplies a “health coach” — on-call 24/7 to address questions.

Founder and chief executive Sean Duffy said Omada gets paid by participants’ employers or health plans — but only if a participant loses weight.

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