I did take note that CVS just passed eight million virtual behavioral health visits in 2021 (see CVS Health Hits 8 Million Virtual Behavioral Health Visits In 2021). The article reminded me of the quote “A million here and a million there and pretty soon we are talking about real money,” from the late U. S. Sen. Everett McKinley Dirksen.

It seems that behavioral health services provided by retail health care organizations and from digital-primary behavioral health provider organizations are steadily chipping away at the available market share for outpatient behavioral health services. Assume (using a very rough estimate), there are about 795,000,000 behavioral health visits accessed by adults in the U.S each year–331 million people; 19.2% of which receive behavioral health treatment in a given year; with 12.5 as the mean number of visits (see Mental Health Treatment Among Adults: United States, 2019 and National Trends In Specialty Outpatient Mental Health Care Among Adults). Using that rough assumption, CVS has managed to capture 1.0% of the market share in 2021 in its fledgling behavioral health operations. (Please note that these calculations are for illustrative purposes only.)

What struck me is that it took relatively few locations in a rather short period of time for CVS to hit eight million virtual visits. In 2019, CVS opened 50 HealthHUBs and currently has 650 open locations (see Integrated Care: The Primary Care/Behavioral Health Care Retail Center Approach At CVS HealthHUBs). By April 2021, CVS had opened mental health services at 13 HealthHUB locations, with plans to expand to 34 locations by the end of 2021 (see CVS HealthHUBs To Pilot Behavioral Health Services In 34 Locations).

And there are literally dozens of similar stories among other retail operations and digital-primary behavioral health provider organizations. In our webinar on the PsychU platform, Retail & Nontraditional Health Care Entering The Market, OPEN MINDS Senior Associate Paul Duck and I discussed the entry into the space by well-known names like Walgreens, Walmart, Amazon, and Kroger. Other retailers jumping into the field include BestBuy and Hy-Vee (see Best Buy Ventures Into Healthcare, Paying $400 Million For Current Health and Hy-Vee Announces The Launch Of New Subsidiary RedBox Rx). At the same time, there are literally dozens (or hundreds) of digital-primary care behavioral health provider organizations that have been created in the past decade (see The Future Of Mental Health Service Delivery: Up Close & Personal With Ginger, Lyra, & Talkspace and Health Plans Are Going Retail & Virtual, So What?).

Regarding the new crop of digital primary operators entering the field, the capacity of these organizations–and the investments–continue to grow substantially. One of the first, Talkspace, now has an estimated revenue of $110 million per year. Using rough math, at an approximate average cost of $175 per visit, they are delivering over 600,000 sessions per year or more (see Talkspace Reports Third Quarter 2021 Financial Results). And there is news of new investments and expansion of digital-primary behavioral health organizations week after week. There are new investments–ieso, UK-Based Digital Mental Health Provider Organization, Raised $53 Million, Virtual Mental Health & Coaching Company BetterUp™ Raises $300 Million In A Series E Funding Round, Mental Health Startup Cerebral Gets SoftBank Funding, Valuation Surges To $4.8 Billion, and AppliedVR Raises $36 Million Series B To Scale Its Comprehensive Virtual Reality Platform For Health Care Applications. And there are continuing investments–Quartet Health Acquires innovaTel Telepsychiatry and LifeSpeak Acquires ALAViDA For $12 Million To Deliver Virtual, Evidence-Based Addiction Treatment Support.

So how do existing organizations providing outpatient behavioral health services compete with this growing competition? I believe there are four key factors that provide a competitive edge in the growing market–related to market segmentation, relationships with health plans, and workforce competitiveness.

First, organizational strategies need to focus on delivering “value” through specialties and serving specific consumer populations–allowing differentiation from this new group of competitors providing more generic services. It is unlikely that most existing provider organizations can compete with the $45 per hour social work visits at Walmart or the psychiatry services of Talkspace at $125 per session. The most likely “value add” is serving the needs of more complex consumers.

Second, preferred contracts with payers and health plans are essential. Building an organization with economies of scale requires a volume of consumers to be served. And, except for organizations that are in the private pay market space, this means getting arrangements with health plans that are preferred in some way (see Three Strategies To “Preferred”).

Thirdly, moving contracting away from volume-based reimbursement to value-added reimbursement models allows leverage of the clinical workforce with technology and provides new opportunities for margins. There are many great forms of tech-enabled treatment on the market–eCBT, texting (both automated and curated), remote monitoring tools of many types, and more. The current conundrum is that use of these tech-enabled forms of therapy are not reimbursed in most fee-for-service systems but can be financially feasible in value-based reimbursement models (see Technology As A Workforce Solution).

Lastly, the ability to compete for and retain the most licensed behavioral health clinical professionals is a critical factor in achieving scale. Without a workforce, service delivery isn’t possible. And with the increased prevalence of behavioral health conditions and competition for licensed professionals, every organization needs a workforce strategy (see The OPEN MINDS Playbook For Optimizing Workforce Recruitment & Performance).

As executive teams of specialty provider organizations look ahead, their strategic plans need to address the new competition from the growing group of retail and digital-primary provider organizations. This four-part framework is a starting point for planning sustainability.