About the authors: @DanGebremedhin is a Principal at Flare Capital Partners, an early stage Health Technology and Services focused VC Firm. He is a practicing physician at the Massachusetts General Hospital, and previously served as an Associate Medical Director at the Harvard Pilgrim Health Plan, and spent five years as an entrepreneur in the Health IT Industry. Matt Schuster is a Deland Fellow in Health Care and Society at the Brigham and Women’s Hospital.
Over the last few decades, Behavioral Health (BH) in the US has faced several challenges amidst the rise of managed care. Historically burdened with financial, staffing, and stigma barriers, investment into BH resources and infrastructure has lagged compared to other forms of medical spending. Despite a projected 2016 U.S. national BH spend of $228 billion, the synthesis of the above factors have led to a well-documented crisis in the care of patients with BH conditions. (For the purposes of this article, we refer to Behavioral Health to include both mental illness and substance abuse conditions.)
Along with the sweeping change we have seen in our insurance markets after passage of the ACA, we believe that the US BH system is due for a similar transformation. With the confluence of persistent BH provider shortages, recognition of the cost impact of BH co-morbidities, and growing consumer demand, a perfect storm is brewing to incentivize innovation in the field. We’ve identified several early stage tech companies that have the potential to navigate a changing reimbursement landscape and solve for the stigma and access hurdles that have created historical gaps in BH care.
Responding to this call, the last 24 months have seen an explosion in the number of behavioral health startups. AngelList counts 213 mental health start-up companies registered on its site, while 20 percent of the Winter 2016 Blueprint Demo Day class were BH startups. These are just a few leading indicators showing that entrepreneurs have realized the impact that technology can have in serving this sector of the healthcare market.
About the Analysis
Below, we’ve profiled over 30 notable BH tech companies, and in so doing, have attempted to categorize the landscape of the many companies pioneering BH Tech. There is no doubt that any taxonomy of start-ups or emerging technology will fall short of being completely exhaustive by the sheer fact that innovation is creating new categories regularly. In addition, many of the companies will span multiple categories as they evolve from point solutions to comprehensive platforms. Understanding that no construct is perfect, we believe generating a framework is helpful to compare and contrast solution offerings in a crowded marketplace. We believe the below analysis will be helpful to entrepreneurs, operators, and investors who are interested in the significant innovation that is occurring in BH technology.
The categories are based on the functional nature of the offering and are further characterized by the problems being addressed and the customer markets (i.e. who pays for the service) being served. We’ve defined the major problems as: 1) Screening and Identification 2) Care Coordination and Disease Management 3) Efficacy of Intervention 4) Cost Effectiveness 5) Access and Convenience. The major customer markets being served are: 1) Providers 2) Payers 3) Consumers 4) Pharma/Device. We’ve noted lead investors for cases in which the below companies are venture-backed and have provided links describing the companies’ offerings that do more justice than our brief descriptors.
Problems Addressed: Screening and Identification, Care Coordination, and Disease Management
Markets served: Providers, Payers
It’s become well documented that patients with unmanaged BH conditions can become a source of multiple downstream costs (e.g. medical, pharmacy, behavioral hospitalizations). In an attempt to address this challenge, a handful of start-ups have attempted to better manage these special populations through aggregation of previously disparate information sources. These sources include patient-reported data through symptom screening tools, behavioral and medical claims from both payers and employers, and BH provider network distribution.
Through aggregation and interpretation of these inputs, emerging firms are attempting to identify BH conditions and medical comorbidities sooner and intervene with clinical solutions more effectively. Many parallels can be seen between these BH aggregators and companies that focus on chronic medical disease care coordination and population health solutions. The BH “aggregators” have made the bet that there are economies of scale and expertise by focusing exclusively on BH conditions to deliver “10x” better solutions.
Among this rapidly growing category is Quartet Health (GV, Oak, F-Prime), led by former Accretive investor Arun Gupta. Quartet is attempting to scale the collaborative care model, by working with health plans, provider systems, and behavioral health managers. This model is exhibited by their recently announced contract with Highmark BCBS. Lyra Health (Venrock, Greylock), led by former Facebook and Genentech CFO David Ebersman, and co-founded by Venrock Partner Bob Kocher, is attempting to work with employers to better screen and identify populations with BH conditions. Once identified, Lyra provides just-in-time access to clinicians who can treat these conditions. AbilTo (HLM, 406, Sandbox) is working with health plans to provide laser like focus on populations that have both BH conditions and medical comorbidities, then delivering crafted interventions to bend the cost curve. New entrants into the space such as Valera Health (StartUp Health) and Mindoula are both providing care coordination solutions for the seriously mentally ill.
How To Win: Given their platform structure, the aggregators have a significant opportunity to play a role in resource selection to deliver comprehensive BH care to populations. In many ways, aggregators are the next generation Behavioral Health Managers and thus their competencies will look similar: building networks of clinicians and solutions, determining appropriateness of interventions, validating efficacy, and contracting effectively. We believe the winners in this space will be able to quantify near term clinical/financial impact and ROI, while aligning incentives for their provider/payer partners. Further, clinical solutions that integrate with native customer workflow seamlessly will have a leg up in clinical adoption and vendor selection.
The Digital Therapeutics
Problems Addressed: Efficacy of Intervention, Cost-Effectiveness, Access, and Convenience
Markets served: Providers, Payers, Pharma, Consumers
A second exciting category is the use of software to treat BH conditions, and thus termed Digital Therapeutics. By using software, companies are providing cost effective therapy that displaces the requirement of fully engaged live clinicians or costly, side effect prone drugs. In addition, there is promise that these software-based therapies could potentially be more therapeutically effective than traditional pharmacologic or in-person therapy alone for certain conditions. Many companies are using evidence-based methods, primarily derived from Cognitive Behavioral Therapy, to engage patients in thought exercises designed to improve their BH conditions. While the jury is still out on improved efficacy, there is little doubt that digital therapeutics provide an accessible and convenient form factor to deliver therapy. Entrants into this market have set out to treat a wide range of BH conditions such as ADHD, anxiety, substance abuse, insomnia, and depression.
An early pioneer in the online CBT space was COBALT, led by CEO Dr. Seth Feuerstein. After commercializing CBT methods studied extensively in RCTs, COBALT was acquired by Magellan Health in 2014. This path to acceptance and adoption by enterprise clients is one that many of the following Digital Therapeutics firms hope to emulate.
Going the FDA Route
A major distinction within this class of intervention is the evidence basis behind the therapy and clinical approach to the FDA. Taking the more rigorous path, a handful of companies are mirroring biochemical therapeutic commercial pathways by developing solutions rooted in clinical evidence and embarking upon randomized clinical trials with plans to submit their research to the FDA for clearance. The presumed benefit of this more rigorous approach is the increased adoption by practicing clinicians and third party reimbursement by traditional payers (commercial insurers, CMS). Given this similarity to big pharma processes, it is no surprise that pharmaceutical firms are closely watching the progression of digital therapeutics as they attempt to go “beyond the pill” with their own interventions.
Two companies that are taking the FDA approach are Akili Interactive and Pear Therapeutics. Akili Interactive (Pure Tech, Jazz) is embarking on a large clinical trial for use of their game, Project: Evo, in treatment of children with ADHD. Pear Therapeutics (5 AM, Arboretum) is creating platforms that allow for the combination of digital tools with standard pharmacotherapy. Two of their first platforms, “reSET” and “Thrive” have shown promising results in substance abuse and schizoaffective disorders, and they’ve announced plans to go to the FDA in 2016 after conducting several RCTs.
Avoiding the FDA (for now)
There are a large class of entrants attempting to use software as a therapeutic, but are choosing initially to bypass the rigorous clinical pathway required by the FDA. These companies are designing interventions and most often marketing them directly to consumers and/or self-insured employers. These interventions are usually targeted at less severe BH conditions such as stress, anxiety, insomnia, and mild depression. Some of the most notable venture backed companies in this class are Happify, Joyable, Big Health, and Lantern.
Happify, (Founder Collective) a company with significant B2C traction making the B2B transition, takes its users through uplifting games to improve resilience and coping to deal with the struggles of everyday life. Joyable (Thrive) is designing constructive CBT based “real world” simulations then matching users with peer coaches to combat conditions like social anxiety. UK-based Big Health (Index, Octopus, Kaiser Permanente) has developed a CBT based platform and launched its first product called Sleepio to treat insomnia. Although the company reports that it conducted the first placebo controlled clinical trial for a digital sleep intervention, there is no publicly reported indication they plan to submit for FDA clearance. Lantern (Mayfield Fund, UPMC), a company with online CBT based programs and coaching for stress and anxiety, recently raised a large Series A financing led by the large provider system UPMC. Having this close affiliation with a large provider system is a promising sign for future distribution and product development with clinician deployment in mind.
A final grouping in this use of software to treat BH conditions features solutions that encompass the use of digital content combined with online communities. Two notable UK based companies that have emerged are Big White Wall and Silvercloud. Both companies have varying forms of digital content and personalized coaching meant to alleviate stress, anxiety, and mild depression but also create anonymous sharing communities intended to allow peer-to-peer counseling and support. These companies are attempting to commercialize and digitize group therapy, which is a staple of traditional in-person BH treatment.
How to Win: We believe that winners in the digital therapeutics space will be able to walk the line of having quantifiable clinical impact while also exhibiting high user engagement. While a handful of the entrants have shown promising early clinical data, getting users/patient to engage, and stay engaged remains a challenge, especially given that many of these patients are struggling with mental illness. As tracking financial ROI may prove to be difficult in this category, user engagement is becoming a ready proxy many enterprise clients will use to measure effectiveness and impact. This underlays a broader digital health departure from traditional PMPM pricing models for populations and slow but steady migration to a pricing per activated user model.
Problems Addressed: Access and convenience, Cost-Effectiveness
Markets served: Providers, Payers, Consumers
A major barrier to mental health treatment is access to properly trained clinicians. This supply/demand mismatch is exacerbated in rural communities, where the prevalence of mental health conditions far outstrips the availability of mental health practitioners. In addition to geographic proximity, the inconvenience and lack of anonymity of in-person therapy is a barrier to seeking care. A handful of entrants aim to solve for these inefficiencies by scaling the BH workforce to provide cost effective, convenient access to mental health treatment.
One early stage, notable example in the “Scaler” category was the seed-stage 1 Doc Way (Great Oaks, Waterline). Led by CEO Samir Malik, an entrepreneur with a background in psychiatric hospital operations, the company pioneered a mental-health-only telemedicine platform that aimed to solve the supply/demand mismatch experienced by low resource settings. After generating early commercial traction in a handful of geographies, the company was acquired by Genoa, a specialty pharmacy focused on Behavioral Health pharmaceuticals.
Two early stage companies that are pioneering the next wave of tele-behavioral health are Mindcare Solutions and Regroup Therapy. Mindcare (Epiphany Health), led Dr. Stephen Ambrose, a psychologist and former VP of Anthem BH, provides tele-behavioral health to a number of care settings including long term care, correctional facilities, and primary care centers. Regroup (OCA Ventures) is attempting to solve for the BH staffing and capacity constraints of health systems by deploying clinicians in just in time fashion through a HIPAA compliant video platform.
Two notable examples of an early stage companies digitally scaling the BH workforce are Talkspace and Ieso. Talkspace, (Norwest, Spark) co-founded by CEO Oren Frank and wife Roni, is pioneering text message-based talk therapy provided by licensed therapists. Using asynchronous messages, therapists can manage “digital panels” of patients, while still seeing patients in their normal face-to-face clinical practice. Ieso (Imperial), a UK based company, is developing a scaled, digital therapist network deploying protocoled CBT pathways that promise cost savings for at-risk providers and payers. The company has seen significant results with various NHS deployments and is eyeing a US launch.
The largest traditional telemedicine providers (American Well, Teladoc, Doctor on Demand, MD Live) have all moved to add behavioral health professionals into network to service their extensive B2C and B2B business lines. While the practice of telepsychiatry was one of the first uses of telemedicine, barriers to widespread adoption include diverse state regulations regarding telemedicine, inconsistent reimbursement methodologies, and concerns regarding maintenance of continuity of care.
How to Win: As health systems and payers have a continued focus on population health and integration of medical and behavioral health, the cost effective nature of the scaling technologies will play an increasing role in organizations’ BH strategy. We believe the winners in this space will design product/service portfolios, pricing schemes, and KPI reporting that accommodate the evolving needs of health systems and payers as they transition from fee-for-service to value-based care payment schemes.
Problems Addressed: Screening and Identification, Efficacy of Intervention
Markets served: Providers, Payers, Consumers, Pharma/Device
The final category of innovation in BH tech lumps together a set of solutions that attempt to find novel ways to track symptoms of BH conditions and outcomes of treatment. The importance of this function is rooted in subtle clinical nuance of BH: from a clinical standpoint, BH disorders are often more challenging to treat than medical conditions. Unlike medical diseases, which can be tracked by physiological markers and quantifiable data, BH conditions are identified and tracked by subjective, qualitative, and self-reported measures. Further, management of populations with BH conditions is inherently difficult given potential interference of patients’ impaired cognition with adherence to treatment and care plans.
The tech based solutions in the “tracker” category run the gamut from survey questionnaires to passive sensing technologies on devices such as smart phones. Given the component nature of this feature set, solutions in this category may be part of a larger platform or may work in tandem with other solutions such as digital therapeutics or aggregators.
One of the pioneers in this tracking category was Ginger.io (Khosla, Kaiser Permanente, Romulus). With research that grew out of Sandy Pentland’s MIT Media Lab, Ginger.io led the way in collecting data passively from patients’ mobile phones, using the interpreted behavioral patterns as leading clinical indicators of mental health status. The company has combined this core sensing technology with a therapist/coaching platform to intervene when concerning changes in behavior are detected. Another entrant with a similar business model is Health Rhythms. Instead of providing their own health coaches, Health Rhythms is currently working with provider systems to use their sensing technology as an activator for clinicians and nurse managers. A final interesting passive tracking company is Mevoked (Mayo Clinic, Launchpad). By analyzing the internet browsing behavior of users, the company can infer relative changes in mood and well-being. The company has deployed products targeted at special populations such as adolescents and pregnant women, but the paradigm is broadly applicable as a mental health sensing technology.
Most parameters of mental health status and outcomes are currently assessed through standardized questionnaires and assessments, such as the PHQ9, a commonly used depression screening tool. This format of assessment lends itself well to digitization and automated deployment through SAAS platforms. There are a handful of companies that are entering the BH provider market to digitize much of this assessment and measurement workflow. These companies include Owl Insights, Cog Cubed, and Mentegram.
The promise of all companies in the tracker category is that new insights on improved efficacy can be gleaned through analyzing correlations between symptoms, interventions, and outcomes. These data and insights can then be conceivably resold and monetized to provider systems, payers, and pharma/device companies with the promise of better outcomes and cost savings in risk-based payment schemes.
How to Win: We believe the stand out companies in this space will grow from just providing tracking/outcomes reporting, to servicing more of provider/payer workflow. This product roadmap could extend upstream, helping to automate provider documentation and stratification of patients who need to be seen earlier/sooner. The product evolution could also evolve downstream, determining real-time intervention in the form of medication adjustment or referral/triage to appropriate level of care based on patient needs. Ultimately, companies who can automate much of the care workflow through clinical algorithms will be valued in the marketplace, allowing clinicians to focus on critical decision making required for caring for patients with BH conditions.
A special note about Substance Abuse
Given the above framework, we’d consider Substance Abuse as a unique condition that many of the above technologies can be used to treat. That said, given the current epidemic nature of substance abuse, many companies have been started to specifically address the vertical of substance abuse. We’d like to make special mention of a few companies given the importance of their role in this ecosystem.
Sober Grid (Launchpad) is using social networking as both a scaling technology and digital therapeutic to provide patients with a virtual support network that serves as a form of group therapy. The company also allows treatment facilities a way to extend treatment and maintain relationships with patients outside of their four walls.
WorkIt Health (Montage, Lux) recently made news with the fundraising of a $1M seed round to expand upon its multi-modal 90-day digital substance abuse program. By marketing their services to consumers as well as employers, WorkIt is providing a digital alternative to traditional brick and mortar services.
Column Health is a Boston-based, next-generation substance abuse clinic focused on treating patients with opiate addiction. By focusing on third party reimbursement, value-based payments, and a concierge-like patient experience, Column has seen rapid traction in treating a very challenging patient population.
Two companies partnering with rehab facilities to support patients post discharge are Sparkite and Triggr Health. Sparkite (Blueprint) provides a tech enabled support and CRM platform for patients and rehab centers after discharge, the most vulnerable time for relapse. Triggr is combining tracking and workforce scaling technology to provide just-in-time services to patients struggling with substance abuse.
We hope this analysis provides a helpful guidepost in navigating the great work many companies are doing to improve the care for BH patients. In addition, we believe that many valuable companies will be built in this space by serving the double bottom line in BH care. We encourage you to reach out to us on social media and share comments to continue the conversation around ways to innovate solutions for the unmet need in the BH community and industry.