The use of therapy contractors, however, creates churn in the provider base - a suboptimal model for a treatment that requires strong rapport between patient and provider. Popularized by Uber, gig work became the darling of the tech world around the same time Talkspace and BetterHelp got started (in 20, respectively). “So you can only imagine what the demand would be if there was insurance coverage.” Changing the workforceĪnother issue with the older generation of teletherapy products was the therapy workforce itself. “What’s interesting is these businesses have scaled quite high with consumers paying out of pocket,” said Larry Cheng, managing partner at Volition Capital. So a lot of these startups, like teletherapy-centric Alma, help therapists deal with administrative and billing chores which frees up time for the therapists. Still, working with insurance providers is often difficult for therapists and often doesn’t pay as well as working as a private practice, which is why many therapists don’t take insurance. “I’m just generally not super bullish on pure-play direct-to-consumer user acquisition in health care, and I want to see that the team is thoughtful about getting involved with payers,” said Kevin Zhang, health care-focused partner at Upfront Ventures. And Quartet Health raised $51 million in February to help insurance-based mental health providers find and manage patients. Path, for example, raised $80 million in February to connect people exclusively with in-network therapists. So Volition and other venture firms are funding teletherapy startups with a more traditional, insurance-based model. “I don’t necessarily think it was consistent with how patients or providers think about what really high-quality mental health care looks like.” “I think that was sort of a very heavy-handed approach from venture capitalists to put a business model that has worked in other industries on to mental health care,” said Claude de Jocas, vice president at Volition Capital. But the subscription model had its drawbacks. Instead of billing insurance (a time-gobbling hassle), patients could pay a monthly fee to access their therapist for sessions. Telehealth companies of yore adopted a pay-out-of-pocket monthly subscription model that was, for a time, far more appealing than getting on a waitlist for the handful of providers in your network. BetterHelp was acquired by Teladoc Health in 2015 for $4.5 million per Crunchbase data, and Talkspace went public in 2021 (and is trading considerably lower than when it debuted).Ĭurrently, the second generation of teletherapy startups are operating much differently from the giants that preceded them, with the support of today’s venture firms. This pressure cooker of innovation and policy change has created teletherapy companies such as BetterHelp and Talkspace, two of the largest in the U.S focused on online mental health care. And the gig-worker model popularized by Uber was seeing widespread adoption in workforces across all industries. At the same time, the smartphone was becoming faster, more sophisticated and cheaper, driving companies to develop a wide variety of phone apps. The 2010 Affordable Care Act largely required insurance companies to cover mental health resources. The first generation of tech-enabled telehealth platforms formed in the early 2010s at the nexus of three dramatic innovations.
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