Will digital health maintain its growth?

This blog post has been written by the person who has mapped the digital health market in a clean and beautiful presentation

The digital health market represents one of the most compelling investment opportunities of the decade, with growth rates that dwarf traditional healthcare sectors.

For entrepreneurs and investors seeking to capitalize on this momentum, understanding the quantitative drivers, barriers, and regional variations is essential for making informed decisions. And if you need to understand this market in 30 minutes with the latest information, you can download our quick market pitch.

How much did the digital health market grow in 2024 and what are the most reliable numbers for 2025?

The digital health market achieved robust 15.9% year-over-year growth, expanding from $362.36 billion in 2024 to $420.08 billion in 2025.

This growth rate significantly outpaces traditional healthcare sectors and reflects the permanent behavioral shifts triggered by the pandemic. The US market specifically grew from $79.10 billion to $92.08 billion, representing an 11.6% increase that demonstrates mature market resilience.

Multiple research firms validate these figures through convergent methodologies. Precedence Research, Statista, and Grand View Research all report similar growth trajectories, with variations under 3% between their projections. The consistency across data sources strengthens confidence in these numbers for investment planning.

Venture capital flows provide additional validation—$10.1 billion was deployed in 2024, with H1 2025 reaching $6.4 billion, suggesting full-year 2025 funding will approach $12.8 billion. This capital velocity supports the revenue growth projections and indicates continued investor confidence.

Looking for growth forecasts without reading 60-page PDFs? Our slides give you just the essentials—beautifully presented.

What are the forecasts for digital health market growth over the next five and ten years?

The digital health market will reach $729.81 billion by 2030 and $1.267 trillion by 2035, representing an 11.68% compound annual growth rate through this decade.

This trajectory reflects conservative modeling that accounts for market maturation effects. While early-stage growth exceeded 20% annually during pandemic years, the forecast assumes normalization as the market reaches scale. Five-year growth averages 11.7% annually, while ten-year projections moderate slightly to account for competitive saturation.

Regional variations significantly impact these projections. Asia Pacific maintains the highest growth potential at over 18% CAGR, driven by smartphone penetration reaching 67% of the population and government digitization initiatives. North America and Europe show more modest but stable 10-12% growth rates as mature markets optimize existing infrastructure.

The $1.267 trillion ten-year target assumes current adoption curves continue without major technological disruptions. However, breakthrough developments in AI diagnostics, quantum computing applications, or regulatory streamlining could accelerate growth beyond these baseline projections.

If you want updated data about this market, you can download our latest market pitch deck here

What sectors within digital health show the strongest and most consistent growth?

Software leads growth at 17.0% expansion annually, while services maintain market dominance with 65.7% share, creating distinct opportunities for different business models.

What are the biggest drivers of growth in digital health today?

Chronic disease prevalence and aging demographics create sustained demand, while AI adoption and smartphone penetration provide the technological foundation for scalable solutions.

Non-communicable diseases affect 60% of global deaths, driving healthcare systems toward preventive and remote monitoring solutions. This demographic pressure ensures consistent market demand regardless of economic cycles. Healthcare systems recognize that digital interventions cost 40-60% less than traditional care delivery for many chronic conditions.

AI integration transforms operational efficiency and clinical outcomes. Ambient scribe technologies now serve 30-40% of providers, reducing documentation time by 2-3 hours daily per clinician. AI-powered diagnostic tools demonstrate 95%+ accuracy rates in radiology and pathology applications, creating measurable ROI for health systems.

Government initiatives accelerate adoption through regulatory support and reimbursement expansion. The FDA's Digital Health Center of Excellence streamlines approval pathways, while the European Health Data Space harmonizes cross-border data sharing. NHS's "digital by default" mandate requires real-time data integration across all care settings by 2027.

Consumer behavior permanently shifted during the pandemic. Telehealth utilization rose from 8% pre-pandemic to 62% at peak adoption, stabilizing at 30-40% of consultations. Health app usage reached 87 million US adults monthly—30% of smartphone users—indicating normalized digital engagement.

What are the major barriers that could slow digital health growth?

Cybersecurity concerns, interoperability challenges, and implementation costs represent the most significant barriers, with 30% of providers citing security as their primary adoption obstacle.

Data security threats escalate as health systems digitize. Healthcare experiences 2.5x more cyberattacks than other industries, with average breach costs exceeding $10 million per incident. Small and medium healthcare providers lack cybersecurity expertise, creating vulnerability that slows digital adoption. Regulatory compliance adds complexity, with HIPAA violations averaging $1.4 million in penalties.

Interoperability failures waste $30 billion annually in the US alone. Ninety percent of industry leaders identify lack of technical standards as a major implementation hurdle. Different EHR systems, device manufacturers, and software platforms operate in silos, requiring expensive custom integration work that can add 20-30% to total implementation costs.

High upfront costs particularly burden smaller healthcare organizations. SME hospitals face 20-30% higher total cost of ownership compared to large health systems due to limited negotiating power and technical expertise. Implementation timelines average 18-24 months for comprehensive digital transformations, creating cash flow challenges.

Regulatory uncertainty extends procurement cycles by 15% as organizations await clearer guidance on reimbursement, liability, and compliance requirements. The rapidly evolving regulatory landscape makes long-term planning difficult, particularly for AI-powered solutions where guidelines remain in development.

How much investment capital is flowing into digital health in 2024 and 2025?

Digital health attracted $10.1 billion in venture funding during 2024, with H1 2025 reaching $6.4 billion, projecting full-year 2025 funding near $12.8 billion.

AI-enabled startups captured 62% of total funding in H1 2025, raising $3.95 billion across 115 deals. These companies command premium valuations, with average deal sizes of $34.4 million—an 83% premium over non-AI digital health startups. This premium reflects investor confidence in AI's ability to deliver measurable clinical and operational improvements.

Geographic distribution shows North American companies received 68% of global funding, European startups captured 22%, and Asia Pacific secured 10%. However, Asia Pacific deal volume increased 45% year-over-year, indicating emerging market acceleration. Latin American and Middle Eastern markets remain nascent but show early-stage investment activity.

Stage distribution favors later-stage companies, with Series B and beyond representing 60% of total capital deployed. This shift from earlier years indicates market maturation, as investors focus on companies with proven business models and clear paths to profitability rather than pure growth metrics.

Need a clear, elegant overview of a market? Browse our structured slide decks for a quick, visual deep dive.

If you want clear information about this market, you can download our latest market pitch deck here

How has consumer adoption of digital health services changed over the past two years?

Consumer adoption stabilized at permanently elevated levels, with 87 million US adults using health apps monthly and telehealth consultations maintaining 30-40% of total visits compared to 8% pre-pandemic.

Patient portal usage reached 86% of US acute hospitals by 2021, up from under 40% in 2015. Active monthly users of these portals increased 340% during 2020-2022, with engagement remaining 250% above pre-pandemic levels. Consumers now expect digital access to health records, appointment scheduling, and prescription management as standard service offerings.

Wearable device adoption expanded beyond fitness tracking into clinical monitoring. The sensor-based wearables segment reached $42.2 billion in 2024, with medical-grade devices representing 35% of this market. Remote patient monitoring deployments grew 40% year-over-year as health systems integrate consumer devices into care protocols.

Mental health apps experienced the most dramatic adoption surge, with downloads increasing 700% during pandemic years and sustaining 400% above baseline levels. Subscription-based mental health platforms demonstrate 80%+ gross margins with strong retention rates, indicating sustainable business models in this segment.

Demographic patterns show younger consumers drive adoption but older adults maintain usage once onboarded. Adults over 65 represent 28% of telehealth users, compared to 15% pre-pandemic, indicating successful expansion beyond digital natives.

What regulatory changes are shaping the digital health landscape now and in the near future?

The FDA's Digital Health Center of Excellence, European Health Data Space implementation, and NHS "digital by default" mandate create regulatory tailwinds that accelerate market adoption through 2027.

FDA guidance streamlines Software as Medical Device (SaMD) approvals through predetermined change control plans and real-world evidence pathways. This reduces approval timelines from 18-24 months to 6-12 months for qualifying digital therapeutics and AI diagnostic tools. The Pre-Cert pilot program allows qualified developers to market lower-risk software updates without additional submissions.

The European Health Data Space, launching in phases through 2024-2027, harmonizes health data sharing across EU member states. This creates a potential market of 450 million patients for digital health companies, enabling larger-scale clinical trials and population health analytics. GDPR compliance requirements simultaneously create barriers for smaller companies lacking privacy expertise.

CMS reimbursement expansion permanently covers telehealth services that were temporarily authorized during the pandemic. Rural health providers receive enhanced reimbursement rates, creating market incentives for serving underserved populations. Medicare Advantage plans now cover digital therapeutics and remote monitoring devices as standard benefits.

State-level licensing reciprocity for telehealth providers reduces operational complexity for multi-state platforms. Interstate medical licensure compacts now include 32 states, enabling practitioners to serve patients across state lines without multiple licensing requirements.

How is the competitive landscape evolving and what market share trends can we observe?

Market consolidation accelerates as established players acquire innovative startups, while new entrants focus on AI-powered niche solutions rather than broad platform competition.

If you want fresh and clear data on this market, you can download our latest market pitch deck here

What geographic regions contribute most to digital health growth?

North America leads with $92.08 billion projected 2025 revenue, while Asia Pacific delivers the fastest growth at over 18% CAGR driven by smartphone penetration and government digitization initiatives.

The US market demonstrates mature adoption patterns with stable 11.6% annual growth. High healthcare costs ($4.3 trillion annually) create economic incentives for digital efficiency solutions. Venture capital concentration provides funding access, while regulatory clarity supports commercial scaling. Major health systems like Kaiser Permanente and Cleveland Clinic serve as reference customers for new technologies.

European markets grew to $146.80 billion in 2025, benefiting from coordinated regulatory frameworks and universal healthcare systems. The European Health Data Space enables cross-border scaling, while GDPR compliance creates competitive moats for privacy-focused solutions. Nordic countries lead adoption with government-sponsored digital health initiatives.

Asia Pacific represents the highest growth opportunity despite smaller current market size. China's aging population (280 million over 60 by 2025) drives chronic disease management demand. India's smartphone penetration (750 million users) enables mobile health solutions at scale. Government initiatives like Singapore's Smart Nation program and Japan's Society 5.0 provide regulatory support.

Latin America and Middle East/Africa remain emerging markets with 7.1% and 5.3% CAGRs respectively. Infrastructure limitations constrain growth, but mobile-first healthcare solutions show promise in markets with limited traditional healthcare access.

Wondering who's shaping this fast-moving industry? Our slides map out the top players and challengers in seconds.

How are technological advancements like AI and remote monitoring translating into measurable adoption?

AI adoption accelerated dramatically with ambient scribe tools reaching 30-40% provider adoption and diagnostic AI achieving 95%+ accuracy rates in radiology applications, while remote monitoring deployments grew 40% year-over-year.

Ambient clinical documentation solutions demonstrate clear ROI by reducing physician documentation time by 2-3 hours daily. Companies like Nuance (Microsoft), Abridge, and Suki report rapid enterprise adoption as health systems seek to address physician burnout. Implementation typically pays for itself within 6-12 months through improved physician productivity and reduced administrative costs.

AI diagnostic tools achieve measurable clinical improvements in specialized applications. Radiology AI platforms identify abnormalities with 95%+ sensitivity rates while reducing interpretation time by 30-50%. Pathology AI assists with cancer detection at accuracy levels matching or exceeding human specialists. These tools now integrate into standard workflows at major health systems.

Remote patient monitoring expanded beyond pilot programs into systematic deployments. Chronic disease management programs using RPM devices demonstrate 25-40% reductions in hospital readmissions and 15-30% decreases in emergency department visits. Medicare and commercial payers now provide dedicated reimbursement codes for RPM services.

Edge computing and 5G connectivity enable real-time health monitoring applications previously impossible with network latency constraints. Continuous glucose monitors, cardiac event monitors, and fall detection systems now transmit data instantly to care teams, enabling immediate intervention when clinical thresholds are exceeded.

What are the most successful business models in digital health and what evidence shows their profitability?

Subscription-based models achieve 80%+ gross margins in telehealth and mental health segments, while platform licensing generates 70%+ recurring revenue for EHR and analytics companies, demonstrating superior scalability compared to traditional healthcare delivery models.

• Subscription/SaaS Models: Companies like Livongo (chronic disease management), BetterHelp (mental health), and Hims & Hers (primary care) achieve 80-90% gross margins through digital service delivery. Monthly recurring revenue models provide predictable cash flows and high customer lifetime values, typically 5-10x customer acquisition costs.
• Platform Licensing: EHR providers like Epic and analytics companies like Palantir generate 70%+ of revenue from recurring licensing fees. Once implemented, switching costs create strong customer retention, with annual churn rates below 5%. These companies achieve 30-40% EBITDA margins at scale.
• Transaction-Based Models: Telehealth platforms like Teladoc charge per consultation, generating 50-60% gross margins. While lower than subscription models, transaction volumes scale rapidly with provider network effects. Successful platforms achieve unit economics improvement as network density increases.
• Marketplace Models: Companies like Zocdoc (appointment booking) and GoodRx (prescription discounts) monetize through lead generation and transaction fees. Two-sided network effects create defensible moats once critical mass is achieved in local markets.
• Direct-to-Consumer (DTC): Digital-first primary care and specialty services bypass traditional insurance models, charging monthly membership fees. Companies like Forward and One Medical achieve higher patient satisfaction scores while maintaining 60-70% gross margins through operational efficiency.

Planning your next move in this new space? Start with a clean visual breakdown of market size, models, and momentum.

Conclusion

Sources

1. Precedence Research - Digital Health Market Analysis
2. Statista - Digital Health Market Outlook
3. Galen Growth - Q2 2025 Digital Health Pulse Check
4. Rise TKU - Health Industry VC Report 2025
5. BioSpace - Digital Health Market Forecast
6. MetaTech Insights - Digital Health Market Analysis
7. Digital Health Net - NHS 10-Year Plan Analysis
8. InsightAce Analytic - Digital Health Market Report
9. Straits Research - Digital Health Market Study
10. MarketsandMarkets - Digital Health Market Research
11. GoHub VC - Digital Health Investment Trends 2025
12. MedCity News - Digital Health Venture Capital Analysis
13. Galen Growth - AI and TechBio Funding Analysis
14. Research Nester - Digital Health Market Report
15. Grand View Research - Digital Health Industry Analysis