Silicon Valley bet big on telehealth startups. Here's why so many clinicians did too

In late 2021, telehealth startup Cerebral was having a moment. Its founders could not have foreseen when they launched their company in January 2020 that the world was about to enter a historic crisis, one that would soon position it for explosive growth.

But demand for mental health services spiked during the COVID-19 pandemic, and Cerebral was well-positioned to provide them in a socially-distant way. Moreover, it was able to gain ground with clinicians who were increasingly burnt out working in traditional healthcare.?

While Cerebral wasn’t the only company offering virtual mental health services, it quickly became a Silicon Valley darling, soaring to a valuation of $4.8 billion last December and even bringing on famed gymnast Simone Biles as its chief impact officer.

The high didn’t last.?

Nearly a year later, Cerebral is facing a U.S. Department of Justice investigation into its prescribing practices. Its clinicians can no longer prescribe stimulants for attention deficit/hyperactivity disorder. And its CEO resigned as the company enacted a round of layoffs.?

The repercussions have rippled throughout industry, with pharmacies like Walmart now refusing to fill ADHD prescriptions ordered via telehealth.

Yet LinkedIn data shows that it wasn’t just investors who were jumping into the space. Joining them were plenty of clinicians who wanted to be part of this growing field – driven as much by the promise of more money and flexibility as excitement about the mission.?

Cerebral surfaced highly – in the top 10 – on the list of LinkedIn’s Top Startups this year, which looked at data from July 2021 through the end of June.??

It wasn’t alone. In fact, roughly a quarter of this year’s Top Startups are healthcare-related – and of those, the majority are focused on digital health, primarily for mental health conditions.

Making the list means these companies have been making big gains in employee growth, seeing high levels of jobseeker interest and competing with the same blue-chip players that show up on LinkedIn’s coveted Top Companies list. (For more on this year’s list and methodology, check out our article here.)

Healthcare skills were in particularly high demand among new hires – which is likely no surprise to any nurse practitioner or therapist who’s been job searching recently. Clinicians report seeing numerous job ads for telehealth positions, with pay topping $100/hour.

But the question remains: are clinicians running toward these startups as an enticing new opportunity – or are they running away from a broken legacy system??

The good, the bad and the ugly

Telemedicine on the whole has generally been seen as a net positive, increasing access for patients by offering convenient, socially-distant care at affordable prices. Those benefits can be key for people who struggle to take time off work, or live in areas with a clinician shortage, or can’t find someone who has appointment availability, let alone who takes insurance.?

For healthcare professionals, the selling points have been similar. In comments on LinkedIn, a number have mentioned that they turned to telehealth to supplement their income or because it was safer (and more flexible) than in-person visits.

Still, as clinicians have learned, there are sacrifices, from loneliness to feeling disconnected from their patients.?

“The long-term picture is going to be determined first by how providers vote with their feet,” said Tom Cassels , CEO of Rock Health, a digital health research and advisory firm. “When we hire people into a telehealth-only platform, those people are opting out of having their own patients. And that’s hard to sustain.”

The downsides of working for a startup aren’t just loss of autonomy. Some nurse practitioners report pressure to see as many patients as possible, without being given adequate time to perform a full evaluation. “A lot of places will promise great salaries but they want you to see four patients per hour,” said Joy Lauerer , an associate professor in the College of Nursing at the Medical University of South Carolina, recounting experiences from fellow psychiatric nurse practitioners.?

That pressure can create issues at a time when clinicians report that they’re not only seeing more people with mental health conditions, but more severe ones. There are also ethical concerns when companies market themselves to patients who have certain conditions, through targeted advertising, for example.

When patients log on expecting a prescription at the end of the visit, it plays into the narrative that nurse practitioners provide substandard care, noted JoEllen Schimmels , an associate professor in the psychiatric mental health nurse practitioner program at the University of New Mexico’s College of Nursing.?

“These types of places take away our legitimacy as independent thinkers,” she said.

She particularly bristles at how the investigation of Cerebral has impacted anyone who practices over telemedicine. “It’s like they’re scrutinizing anyone who prescribes stimulants at all now,” she said. “Our hands are tied in how we can practice.”

Cerebral, for its part, says it has put in place a number of initiatives to improve quality of care, like using data to better match patients with clinicians based on their level of acuity. And it has integrated machine learning into its electronic messaging system to identify words that indicate that someone might be in crisis – allowing it to increase response times from 12 hours to just 12 minutes, according to Kevin Oliveira Callender , the company’s head of people.

Yet the future that Cassels at Rock Health sees in the telehealth space is one that’s omni-channel – meaning there are virtual options that still link to the traditional healthcare system.?

“Mental health is the most dangerous place to play in a virtual environment,” Cassels said. “If you’re attracting patients because it’s the simplest way to get their prescriptions filled, I think you’re out of your depth.”

The demand for healthcare skills

Among this year’s Top Startups, Cerebral had the highest percentage of new employees with healthcare skills, representing 42.6% of its hires through June. Other top hirers for healthcare talent included Plume, which offers hormones to patients experiencing gender dysphoria, and Equip, which provides treatment for eating disorders – with 34% and 29% of new hires, respectively, joining with healthcare skills.?

At Spring Health, Lyra Health and Alma – three other telehealth platforms for mental health – between 15 and 18% of new hires have brought healthcare skills.

Alma doesn’t employ mental health professionals, but rather sees them as clients; the clinicians who have joined the company work in other roles like sales or operations, said Harry Ritter , its CEO and founder.?

Alma’s platform offers mental health professionals the technology they need to run a virtual practice, and handles administrative tasks like billing and insurance reimbursement. Unlike competitor Lyra, which contracts with employers, it collects membership fees from clinicians as well as transaction fees from working with insurers.

While it too got its start before the pandemic, it went from working with 150 providers in 2020 to this year’s 8,000 in all 50 states.?

“The simple truth about mental healthcare is that it’s a huge problem,” Ritter said. “You’re seeing all sorts of different solutions [and] I think that speaks to the size of the opportunity.”?

Cerebral, meanwhile, says it’s entering a new phase. After rapidly hiring clinicians at the beginning of the year, “we’re in a mode of growing more sustainably going forward,” Callender said. “We’ve made a big decision on doubling down on clinical quality.”

In an interview, he stressed the benefits that Cerebral offers employees, not only financial but also those related to work-life balance, like quarterly mental health days and free access to its therapy. There’s also the opportunity for fast growth that doesn’t typically exist in traditional healthcare; Cerebral has a number of associate director- and director-level employees who started with the company doing direct patient care, Callender said.?

And while Callender declined to discuss what its recent challenges have meant for recruitment, he noted, “Our retention rates are at their peak.”

Still, it remains anyone’s guess what the future holds for telehealth startups.?

“The traditional clinic is broken,” Rock Health’s Cassels said. “The new telehealth companies are not mature. The ones who will make or break the future will be patients.”