November 1, 2022
Interesting in terms of DSRIP and NY’s 1115 (proposed) waiver:
Venture Capitalists in the MH Space:
Crain’s, 11/1/22: A boom in digital health investments has enabled millions of tech-savvy patients to address their mental health with virtual appointments or digital exercises in lieu of spending an hour on a therapist’s couch. Now venture capitalists are taking the next step: scoping out solutions to make care just as accessible to patients with the most severe mental illnesses.
An estimated 13 million American adults experienced a serious mental illness in the past year, for a cumulative economic impact of more than $300 billion annually, according to federal data. But only a handful of startups across the country explicitly target serious mental illness—a category that refers to any condition that substantially interferes with someone’s life and ability to function. Many of the companies have been around no longer than three years.
Sam Toole, who spearheads health care investments as a principal at Primary Venture Partners, a seed-stage firm that focuses on New York City startups, attributed the relative scarcity of the startups to the difficulty of the problem they aim to solve. Success means building a scalable business model to treat conditions, such as schizophrenia and bipolar disorder, that require a much greater variety and higher quantity of services than low-severity diagnoses.
Primary is an investor in Alma, a local health-tech company that helps therapists manage their practices and partner with insurers, but the firm has yet to invest in a mental health startup that specifically targets serious conditions, Toole said.
That isn’t for lack of trying. Toole said he has seen more startups addressing serious mental illnesses pop up in the last couple of years, and he has met several entrepreneurs who have startups in stealth mode, meaning they are in their early stages and have yet to launch publicly.
“This is just really hard to do,” he said. “You need to provide in-person care. You need to provide virtual care. You need to be with someone at a lot of moments of crisis.”
Plus, he said, the stakes of failure are high.
“If you don’t do something well from day one there are real fundamental health risks,” he said. “You’re really putting a patient’s life at risk perhaps.”
Among the early examples of startups tackling serious mental illness is Firsthand, which launched last year and whose investors include Google’s venture-capital arm, GV.
The Hudson Square–based startup partners with insurers to pair enrollees with “guides,” who understand or have personal experience with the challenges they are facing. The guides connect their clients to community resources, find trusted health care providers and help them keep up with medical appointments.
Samir Malik, co-founder and CEO of Firsthand, said he is betting that the evidence-based practice of peer support will be both effective and scalable.
“A lot of folks who are out there struggling, they’ve lost trust in the system,” Malik said. “Someone who has that lived experience can repair that breach in trust.”
The startup’s health plan partnerships now cover about 55,000 people in Florida, Ohio and Tennessee. A New York footprint is in the works.
“Seven times out of 10,” Malik said, “these individuals will say yes to us, even though they’ve been saying no to so many other resources that the health system is trying to provide.”
He declined to disclose the amount of funding that Firsthand has raised to date, but he said the key to attracting investors has been to show how a startup focused on serious mental illness can achieve significant health care cost savings.
“These individuals tend to cost the system so much money because they’re unengaged and end up in hospitals and emergency rooms at such a high frequency and aren’t really adherent to standard medication routines,” he said. “There’s a lot of opportunity to do better.”
Charlie Health was founded in 2020 and runs virtual intensive outpatient programs for young people and their families. The startup, which has a presence in the city and is based in Montana, provides patients with about 10 hours per week of individual, group and family therapy sessions. Treated conditions include dissociative disorders, mood disorders, substance use disorders, trauma and behavioral issues.
Unlike Firsthand or Charlie Health, some early-stage startups focus on specific conditions within the serious mental illness category. One such newcomer is Arise, a digital health platform based in New York. Designed to treat eating disorders, it launched in July with $4 million in seed funding.
Toole said solutions that address a spectrum of serious mental illnesses, as well as such common co-occurring conditions as substance use disorders, are more likely to be attractive to payers and health systems. He predicted that point solutions that address a specific condition, such as Arise, and mental health startups that provide a specific service, such as psychiatric care, will evolve into that kind of model as they scale.
It’s only a matter of time before startups that address serious mental illness are as ubiquitous as the Talkspaces of the world, he said. But he said he does not expect that they will replace traditional providers. Instead, he envisions a climate of startups working in tandem with hospitals and community-based nonprofits that already serve the population, forming a more complete continuum of care. —Maya Kaufman
|Primary Care Down, Behavioral Care Up|
October 31, 2022 | Monica E. Oss
Every health care executive, analyst, and investor are asking the same question: What will be the lasting effect of the pandemic on consumer relationships with the health care system? The answer will determine where executives make investments in, or develop, new services.
If you review coverage of health care utilization over the past six months, it appears that consumers are returning to pre-pandemic utilization patterns. Office visits are replacing some telehealth visits. Elective procedures are being scheduled. But I read an analysis that disputes that “return to normal” conclusion in a new report, 2022 Trends Shaping The Health Economy (see Trends Shaping The Health Economy). The bottom line: Without including treatment for COVID-19, more than twice as many Americans use no health care in a year now compared to before the pandemic. Prior to the pandemic, 4% of Americans had no health care in a year. That figure is now 11%.And there’s even more data to reinforce this trend. Although national urgent care volumes were 31% higher in Q1 2022 than in Q1 2019, the increase is primarily due to COVID-19-related testing and treatment. For primary care, there has been a negligible (0.2%) increase in primary care volumes in Q1 2022 compared to Q1 2019—and 62% of metropolitan areas have not seen a return to pre-pandemic primary care volumes.
When we look at the health care utilization metrics on a volume basis, only the number of behavioral health visits has grown. Behavioral health volumes are up 17% from Q1 2019. All other health care encounters, including both inpatient and outpatient services, have dropped by 6%. In Q1 2019, there were 69.4 million behavioral health visits paid for by health plans. That number grew to 79.5 million in Q1 2022. The increase in behavioral health visits varies by payer type, with a 24.2% increase in utilization in commercial health plans, an 11.8% increase in Medicaid, and a 1.5% drop in Medicare.The increase in the volume of behavioral health visits was accompanied by a corresponding increase in the amount of prescriptions. Antibiotics were the most prescribed medications by volume in 2019, 2020, and 2021, followed by opioid medications, then antidepressant and anti-anxiety medications. But antidepressant and anti-anxiety prescriptions increased in 2020 and 2021, accounting for 18.8% and 18.9% of prescription volume, respectively, an increase of 17.3% from 2019.
To serve this increase in demand, there are 61 behavioral health professionals (psychiatrists, psychologist, and social workers) per 100,000 people (that number is 110 per 100,000 for primary care professionals). The planning question is whether this trend will continue. And, if it does what will the gap between supply and demand?
But there are other post-pandemic health care trends that call for executive attention. For one, Americans have decreasing trust in health care professionals and organizations. The move to ambulatory services is pronounced, causing a decline in the number of hospitals and cutting into health system margins. In addition, payers and retailers are becoming providers of health care services, and there’s now a substantial (and still growing) number of home care and virtual first provider organizations.
The health care field appears to be at an inflection point, with a likely reset of consumer relationships within the health care system. Consumers are now making health care choices based on convenience, access, and experience. And based on those criteria, they are more likely than in the past to split their health care services among several provider organizations and choose organizations that meet those preferences.
Consider that there are 74 million CVS Loyalty members, that 42% of Americans shop at Walmart each week (220 million), and that 62% of Americans have an Amazon Prime account—these are organizations with a leg up in name brand recognition and loyalty. And they are organizations with a large and growing footprint in the health care landscape. As a result, provider organization sustainability will need to go beyond the “what” of service lines to “why”.
As in, why should consumers and payers should select you?