Investment Craze and Evolution in Virtual Mental Health: The Promise and Perils of Betting Big:
By Yulie Klerman
Telehealth 3.0: Are we ready for the next chapter in mental health care digital transformation?
With Telehealth 3.0 on the horizon, the industry is poised to take yet another spiral turn towards proactive, continuous care. But what does this mean for patients, and is the mental health sector ready to embrace this new paradigm?
While Telehealth 2.0 brought chronic disease management and continuous relationships with providers, Telehealth 3.0 takes it a step further with personalized, patient-centered care accessible from the comfort of one's own home. Remote Patient Monitoring (RPM) tools such as wearable technology and IoT devices with advanced Artificial Intelligence (AI) algorithms are set to become the norm, allowing providers to intervene proactively before a problem becomes acute.
Specialties like cardiology, diabetes and women's health have already started adopting Telehealth 3.0, but what about mental health? With the ongoing pandemic highlighting the importance of mental health services, the need for remote and accessible care has never been greater. Will the mental health sector rise to the challenge and embrace the possibilities of Telehealth 3.0?
Join us as we explore the market's readiness for the next chapter in mental health care's digital transformation, and discover what Telehealth 3.0 has in store for patients and providers alike.?
Money Talks: The Significance of Covid-Era Funding:
The mental health sector has seen unprecedented investment in recent years, with virtual care companies receiving staggering amounts of funding. The numbers are nothing short of mind-boggling, with Lyra Health leading the way with a total of $970.1 million in financing across several rounds, culminating in a valuation of $5.58 billion. Other notable companies such as Click Therapeutics ($926.4 million), Cerebral ($462.0 million), Talkspace ($413.7 million), Spring Health ($295.5 million), and many others have also received hundreds of millions of dollars in funding.
The sheer magnitude of these investments is truly breathtaking and a testament to the growing demand for accessible and comprehensive mental health services. In just two years, multiple virtual care companies have each received over $100 million in funding, with some even exceeding $300 million. The mental health industry is booming, and investors are clearly willing to bet big on its potential.
The cascade investment in Lyra Health is a prime example of this craziness, with the company raising $110 million in a Series D funding round in July 2020, followed by a staggering $187 million in a Series E round in January 2021, and then right after that another $200 million in May 2021. The company's latest funding round in January 2022, led by Dragoneer Investment Group, raised an additional $235 million, bringing its total funding to almost a billion dollars. This level of investment is almost unheard of, but it underscores the incredible potential and promise of virtual mental health care.
These figures indicate that investors recognize this area's immense potential, and investors are pouring money into virtual care companies at an unprecedented rate. The future of mental health care looks bright, but only time will tell if these investments will pay off.?
Virtual Mental Health Goes Mainstream: Investments from Big Corporates and Pharma Firms Signal a Mature Market.
The involvement of large corporates and pharmaceutical companies in the virtual mental health space clearly indicates that the market has matured. One example is CVS Health's recent investment of $25 million in Array Behavioral Care, a virtual psychiatric care provider. According to Cara McNulty, CVS Health's president of behavioral health and mental well-being, CVS CVS decided to invest in Array because the demand for virtual psychiatric care is high. About 150 million Americans, equivalent to 40% of the population, reside in federally designated areas that lack mental health professionals. Virtual care offers a solution to this issue by enabling a more equitable allocation of clinical resources, particularly in rural and underserved areas, and promoting collaboration between mental and physical health providers, thus eliminating the obstacles to patient access. The investment from CVS Health shows that the company recognizes the potential of virtual mental health care and plans to innovate care delivery to enhance access in new ways.
The investments made by Boehringer Ingelheim and Blue Cross demonstrate that virtual mental health is becoming a critical aspect of healthcare and that large pharmaceutical and insurance companies recognize the potential of this market. Boehringer Ingelheim's investment of $500 million in Click Therapeutics indicates that the pharmaceutical giant believes digital therapeutics could help solve some mental health treatment challenges. According to David Benshoof Klein, CEO, of Click Therapeutics, this partnership will accelerate the development of personalized, software-based treatments and enable them to reach and help many more patients. Similarly, Independence Blue Cross's investment of $60 million in Quartet Health signals that insurance companies recognize the potential of virtual mental health to improve patient outcomes and reduce costs. Quartet Health uses technology to connect patients with appropriate mental healthcare providers and improve care coordination, especially for chronic mental health conditions.
Virtual mental healthcare providers, such as Iris Telehealth and Array Behavioral Care, have been in the industry for a while, and are attracting significant investments. This is a strong signal that investors anticipate an upsurge in demand for virtual mental healthcare services, and these companies are well-positioned to meet that demand. Iris Telehealth, for example, secured $40 million in Series B funding in April 2022. Geoffrey Boyce, CEO of Iris Telehealth, notes that providers need assistance integrating technology and require a partner to promptly escalate care to prevent patients from ending up in emergency rooms.
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A Mindful Makeover: The Evolution of Virtual Mental Space.
While the money flows into the mental health companies across the board, we can roughly divide them into two waves. The first wave includes veterans such as Talkspace, Ginger, Lyra Health, Spring Health, Modern Health, Click Therapeutics, and Quartet Health, founded between 2011 and 2017. These companies were highly oriented towards employers, offering their mental health services as a benefit to employees of large companies and charging member-based fees. The second wave includes companies like Alma, Cerebral, Grow Therapy, Charlie Health, Talkiatry, Headway, and Brightline, founded after 2018, with the majority emerging just as the COVID-19 pandemic erupted. The pace at which these companies have grown is mind-blowing, with Cerebral growing from just a handful of employees to around 1,000 employed in just a little over a year. This growth was fueled by the unmatched investment mentioned above, allowing these companies to expand at a rate never seen before.
While the first wave took a few years to launch and educate the market, the second wave exploded onto the scene, induced by the changes in policies brought on by the pandemic. The lifting of state and federal agencies regulations that prohibited care across state lines, along with the Drug Enforcement Administration's mandate permitting clinicians to prescribe controlled substances via remote visit, means without requiring an in-person evaluation, has greatly increased the viability and practicality of mental virtual care. These changes have enabled the second wave of virtual care platforms to offer their services as standard reimbursed services to payers, growing fast and becoming attractive to clinicians by freeing them from the hassle of managing claims and other administrative tasks.
Another key difference between the earlier stages and the latter wave of virtual mental healthcare companies is that industry veterans primarily provided coaching and therapy sessions, while the latter wave introduced a more extensive range of online mental health services. Today, these companies offer online counseling, therapy, and medication delivery and management for a diverse range of mental and behavioral health conditions, including depression, anxiety, ADHD, serious mental illnesses, and substance use disorders.
As a result, veterans were compelled to alter their offerings. For instance, the merger between Headspace and Ginger resulted in the creation of a comprehensive telemental health platform that offers evidence-based behavioral health coaching, therapy, and psychiatry services from a smartphone. Meanwhile, Talkspace, one of the oldest virtual mental health platforms, has expanded beyond asynchronous messaging for therapy and on-demand coaching to now include psychiatry services, prescription fulfillment, adolescent therapy, and couples counseling. Additionally, Talkspace Engage is a new product aimed at helping employers promote their mental health benefits to their employees.
To conclude, the recent surge of investments in virtual mental healthcare companies highlights the industry's immense potential and the pressing need for accessible and comprehensive mental health services. Although the veterans played an essential role in laying the foundation, it was the second wave of companies that spurred industry growth through their sharp focus on health plan arrangements. By leveraging new policies and capitalizing on the pandemic's impact, these companies have expanded their reach and now offer a range of services, including a one-stop shop for comprehensive, online mental health care and wellness.
Upgrading Virtual Mental Health Care: Leveraging AI and Data Analytics for Better Outcomes:
Despite the significant investments made in virtual mental health, it is difficult to predict the future of this industry. While the pandemic has undoubtedly accelerated the adoption of telehealth and virtual care models, it remains to be seen whether virtual mental care can sustain its growth in a post-pandemic world. Before March 2020, the Ryan Haight Online Pharmacy Consumer Protection Act of 2008 required a face-to-face visit before any controlled substance was prescribed. However, with the onset of the COVID-19 pandemic, emergency measures were enacted that temporarily suspended this requirement, allowing for online prescriptions of controlled substances without an in-person visit. As a result, online third-party psychiatric platforms rushed to fill the gap, leading to scrutiny of their prescription practices. Ongoing investigations of companies such as Cerebral and Done have raised concerns about the potential dangers of hastily loosened restrictions. However, the emergency exemption that went into effect in March 2020 is scheduled to expire this spring. Nonetheless, the Drug Enforcement Administration (DEA) is presently working on modifying its rule to allow the prescription of controlled substances via telemedicine. The proposed amendment would allow for the prescription of controlled substances under limited circumstances, yet, the details of the proposed amendment have not been finalized, and it is still under review by the DEA.
The virtual mental care industry faces various challenges, including the limited time clinicians can spend with each patient to ensure a sustainable business model, a lack of adequate education due to the freelancer relationship between clinicians and platforms, and concerns about the effectiveness of online diagnoses and monitoring. However, there is potential for improvement through the use of Telehealth 3.0, which utilizes data and AI-driven analytical tools. Implementing Telehealth 3.0 in virtual mental health can help address these challenges and improve the quality of care provided to patients.
By leveraging home-based tools, AI and data analytics, virtual mental health companies can not only improve the quality of care but also adhere to best practices and regulations, ultimately leading to their exponential growth. By implementing data-driven approaches, virtual mental health companies can increase efficiency, accuracy, patient satisfaction, and trust. These advancements can justify the significant investments made in recent years, enabling companies to scale their operations while maintaining high standards of care. Ultimately, integrating AI and data analytics can help propel virtual mental health care into the mainstream, making it safer.
About author:
Yulie Klerman?is a highly experienced business professional with over 15 years of experience in the global commercialization of innovative healthcare solutions. Her impressive resume showcases her expertise in digital health, demonstrating her deep understanding of the industry. Throughout her career, Yulie has worked with some of the world's leading healthcare providers and technology companies, helping them to develop and launch cutting-edge products and solutions that improve patient outcomes and enhance the patient experience. Yulie is also known for her ability to think outside the box and always look for new and creative ways to engage with patients and healthcare providers. For the past two and a half years, Yulie Klerman has been serving as an advisor to the iFocus Health team, providing valuable insights and expertise related to commercialization, go-to-market strategy, and business development.