Mental Health Landscape

Summary

• Mental illness affects 50+ million people in the US and it costs the US economy $193.2 billion in lost productivity and earnings. Yet nearly 50% don’t seek treatment, primarily because of 1) inaccessibility of care, 2) inconsistency in the quality of care (misdiagnosis & inability to measure outcome) 3) lack of proper care management tools which results in discontinuity of care and poor engagement, 4) stigma, 5) and lack of awareness and motivation to seek care (disconnect between symptoms and treatment).
• Why now? Telehealth adoption is on the rise, technology enables individuals to take better control of their health, mental health plan is prioritized over other benefits when choosing an employer, lots of efforts are being made to increase awareness and destigmatize mental illness. Also, as healthcare moves toward a value-based, coordinated care model, a growing number of providers will try to address the behavioral health needs of all patients as a means of improving their overall health.
• We’re excited about:

Mental health landscape:

Mental health issues affect billions of people across the globe, touching every community and every family, and evidence shows the issue is worsening. To address the issue, we need to invest in companies that expand access and improve outcomes, while lowering costs.

To shed some light on the problem:

• 50 million adults in the U.S. deal with mental illness every year; 264 million globally.
• Mental illness costs the US economy $193.2 billion in lost productivity and earnings; that number is $1 trillion globally.
• Depression is the leading cause of disability worldwide.
• Nearly 60% of people with psychiatric disorders get no treatment.

To unpack the problem and develop our thesis, I conducted surveys, spent time with technologists, entrepreneurs, providers, and those seeking care to better understand:

1. What barriers exist within the market and what factors increase the likelihood of treatment avoidance?
2. Why now is a good time to address this problem?
3. What kind of solutions and business models could thrive in this market?

Barriers/Gaps

1 — Access is still a challenge

Out of 50 million adults who experience mental illness, an astounding 60% don’t receive treatment, primarily because:

• There’s a shortage of qualified professionals across the country, especially outside of urban areas.
• 29% of those needing and willing to seek care didn’t know where to go to get help.
• There’s no integration of mental health and physical health — traditionally they have been two separate systems that result in suboptimal treatment of the patient.
• 42% of those willing to seek care say insufficient insurance coverage deters them from seeking care.
• Providers often only accept private pay and patients have to seek out-of-network care.

2 — Quality of care is not adequate — Difficult to quantify the outcome

• Only 33% of those seeking care are treated adequately, primarily due to the lack of industry-wide quality standards and lack of means to measure improvements and results.
• Many care providers do not consistently adhere to evidence-based guidelines — there is an incredible variance in quality.
• While tech-enabled companies hold promise, the claim of efficacy is not supported by real evidence of clinical outcomes.

3 — No Continuity of care and proper care management which results in low utilization and low adoption

• ¾ of patients discontinue their care because of care management fragmentation and lack of system intervention.
• Discontinuity of care will impact its usefulness as it impairs provider-patient relationships and efficacy of treatment.

4— Stigma associate with mental illness

• Researchers found that stigma and embarrassment were among the most common reasons why patients with mental illness avoid seeking treatment.
• There is social stigma, which involves the discriminatory attitudes others have around mental illness; and self-perceived stigma, which involves the feeling of inadequacy that the patients suffer from. Stigma will often result in internalized shame which has also been found to lead to poorer treatment outcomes.

5— Awareness and motivation are low — There is a disconnect between symptoms and treatment

• The average delay between symptom onset and treatment is 11 years, primarily because individuals disregard the symptoms until the symptoms become debilitating.
• Many of the participants we spoke with experience various levels of stress and mental health complications, but do not necessarily associate those symptoms with a mental health issue and don’t consider treatment as a solution. They acknowledged certain feelings or difficulties but do not necessarily view them as chronic issues. In many cases, their symptoms become normal standards.

Why Now

We think now is a great time to invest in this sector as:

1. Telehealth adoption is rising among physicians and patients with 100% increase in usage in three years (14% in 2016 to 28% in 2019). This could result in much better access, quality, and continuity of care. (Problem one and two)
2. We also expect a shift in consumer attitudes and behaviors toward better engagement in their health. With technological tools and full visibility into their health information, consumers will be able to perform many activities that today require a clinician’s involvement. (Problem three)
3. A lot of efforts are being made to destigmatize mental illness and make it OK to seek treatment. People are 50% more likely to seek help than 5 years ago. (Problem four)
4. Awareness is on the rise as celebrities have been revealing their mental health challenges and seeking care has become more popularized. (Problem five). In a recent study by Ginger, they found that:

• 50% of U.S. workers reported that they are more likely to seek help now than they were five years ago,
• Workers consider mental health support as top priorities over financial advising, gym memberships, free meals, and others. This trend will continue to be on the rise as younger generations enter the workforce.
• 91% of U.S. workers believe that their employers should care about their emotional health.

What the market looks like today

We’ve looked at 480+ companies in the sector, and in doing so, have attempted to categorize the landscape into 6 different buckets.

1. B2B Full-Stack Service

Description: Telehealth platforms that provide a comprehensive service with access to in-house or outsourced therapists.

Challenge/opportunity: High utilization and effectiveness are arduous challenges and are becoming criteria many enterprise clients will use to measure impact and ROI.

We believe the champions in this category will

1. Offer evidence-based care with tools to help patients engage, measure outcomes, and receive personalized treatments.
2. Ensure every point in the care system, from the patient to the provider, insurer, and the employer, is succeeding and seeing the results.
3. Be able to quantify near term ROI for the employer.

2. Digital Therapeutics

Description: Software-driven therapies that could potentially be more therapeutically effective than traditional in-person therapy. A major distinction within this class of intervention is the rigorous and evidence basis behind the therapy and clinical approach to the FDA. Many companies in this category are addressing chronic illnesses, which could serve as a great product insertion point to also address mental illnesses given the high co-occurrence of chronic conditions and mental illness.

Challenges:

A. Misalignment of incentives between providers, payors, and patients.

B. Reimbursement — Proving economic value for the payor to drive adoption.

C. Creating tools and educating patients, prescribers, and providers to drive engagement and measurable outcomes.

D. Navigating an evolving and challenging regulatory space.

Opportunities: Companies in this category are the most comprehensive and effective solutions we’ve seen. These products are designed to empower patients to take greater control over their care while delivering clinical outcomes. This means that success will come by showing quantifiable clinical impact while also exhibiting high user engagement. Their adoption will largely depend upon the incentives and priorities of payors so proving clinical outcome and economic gains for the payor is imperative. Also implementing an iterative design process and creating product experiences that trigger and nurture the right emotional reaction. Lastly, they need to be oriented as much to the provider as to the patient.

3. Providers Tools

Description: Digital tools that are penetrating into clinical practice to help providers make better assessments, diagnosis, measure progress, and engage the patients to take control of their health. It also helps them extend the reach of services, and track goals that clients can work toward.

Challenge/opportunity: A few providers we spoke with raised concerns that digital tools will replace personal interaction which in return might impact the efficacy of care. However, we are excited about this category as it can assist providers to diagnose more efficiently and effectively, provide personalized care to each patient, increase engagement in between sessions, and finally, provide patients with more choice over how they want to participate in their treatment. We think success in this category depends on the ease of use and integration strategy with the providers' workflow.

4. B2C Full Stack Services

Description: Holistic platforms that are reinventing how consumers seek care by making it more accessible and cost-effective. Most are subscription-based at an affordable price.

Challenge/opportunity: Unlike physical health, finding the right mental health provider that can offer the right treatment regimen could be very daunting. Given this category’s platform structure, they have a great opportunity to play a role in provider selection. Although companies in this category are making care a lot more accessible, they also need to provide tools to make it more effective. We think successful companies in this category will need to find ways to make better matches, unlike conventional approach that involves a lot of trial and error, make overall therapy more effective and measurable, and provide better patient-therapist engagement tools. Also, build a KPI reporting that accommodates the evolving needs of health systems and payers as they transition from fee-for-service to value-based care payment schemes.

5. Wellness Apps

Description: This is perhaps the most crowded category with countless companies aiming to reduce stress and anxiety and offer general “mental wellness”.

Challenges/Opportunities: Consumer’s obsession with self-care and wellness has contributed to a significant rise of meditation and mental wellness apps. Global user spending in the top 10 highest-earning mobile meditation apps has grown more than 24X in 5 years to $195 million in 2019. Many of the companies in this category focus on sleep, with which impact is relatively immediate and the cost can be compared directly with alternative treatments, such as sleeping pills.

Hundreds of millions of dollars have been invested in digital wellness technology, but it’s hard to discern which apps are proven to achieve tangible outcomes. Researchers found that 64 percent of mental health apps claimed efficacy, but only 14 percent included any evidence. Our main concern in this category is whether the growth is sustainable and whether there could be enough product innovation to keep users engaged. Most successful companies in this category offer a gamified, frictionless, and user-centric mental exercises and we think this “micro-dosing” of mental health practices has delivered significant value to consumers.

6. Other (Peer 2 Peer, Chatbots, Wearables)

Peer to peer: Connects the user to others who have something in common (i.e. job loss, divorce, etc.).

Challenges/Opportunities: It’s great to be connected to people who have had similar experiences, but hard to group them correctly and moderate effectively. Groups need to be highly curated, have good moderators, and have a specific routine so users can relate to each other and find the discussions effective.

Chatbots: Fully automated conversational agent that mostly use CBT to help users track/discover their thoughts.

Challenges/Opportunities: These solutions are convenient and less pricey, they help users shift their mindset, and provide exercises to help users alleviate emotional pain. Although in some cases it has shown to reduce anxiety after 2 weeks of usage, we found it hard to believe that it is sustainable. Questions are scripted which makes it trickier to engage with.

Wearables: This category is mainly focused on assessment and insight into the physiological effect of your emotional challenges such as anxiety.

Challenges/Opportunities: Unlike physical illnesses, which can be tracked by physiological markers and quantifiable data, mental health conditions have often been based on journaling or self-reporting. But now wearable solutions can use the automatically measured biometrics or RMSS variable to guide therapy. They have the power to collect continuous, non-invasive data about the user’s health which if coupled with actionable insights, could shift the paradigm of care in ways that empower patients and providers.

Conclusion:

We believe mental health technology space is still in its infancy and one that holds a lot of promise. As a society, we are becoming more aware of the vital role that behavioral health care plays in our quality of life and technology-driven solutions are making care more personalized, effective, and accessible. We are excited about three categories:

1. A design-centric ‘pocket coach’ that offers personalized and gamified mental exercises based on user’s input, helps users increase awareness over their mental state, and offers tools to help them quantify outcome and re-engage
2. An evidence-based, holistic solution that is constructed based on three pillars of Accessibility, Continuity, and Efficacy, differentiated by unique go to market, and defensible through outcome-based business model.
3. A platform to supplement providers’ services and help them make better diagnosis, engage patients in between sessions, and ultimately make treatments more effective by offering personalized care.

Please reach out with any thoughts and feedback at pourya@thinkplus.vc. Thanks to Maurice and Benson, co-founders of Prairie Health for being my beta readers.