Why digital mental health investments can lead to serious illness

There are digital health investments This year has been slow so far since the blockbuster funding in 2021. Mental and behavioral health startups that have attracted large investor dollars in the wake of the COVID-19 epidemic are not immune to the recession.

There was a lot of hype surrounding virtual mental health equipment during the epidemic, and a variety of startups focused on low-intensity situations such as anxiety, depression and stress.

Chrissy Farr, chief investor and head of health technology at OMERS Ventures, said during a panel discussion that digital healthcare companies may have time to treat more serious mental illnesses such as OCD and eating disorders. Being digital: behavioral health technology 2022.

“I think these companies will do quite well in the coming years, because this is a place where investments have not been made in the same way,” he said.

Alyssa Jaffe, a partner at 7wireVentures, said many players started in low-intensity situations because it was easy to create. However, it can be difficult for startups to expand into more serious situations because that population has different needs and may lack providers.

“What I’m predicting, and what we’re starting to see, is that a lot of SMIs are taking over [serious mental illness] Players, where the lion’s share of the cost is proving those results, and seeing that some of these players are being acquired or those players are being acquired because they are tapping out in some low-intensity conditions, “he said.

Dina Shakir, a partner at Lux Capital, said there have already been some mergers in the Direct-to-Consumer (DTC) tool. But even among employer-centered tools, only a few can be effectively evaluated.

“I think the integration of mental health solutions into more comprehensive solutions or other platforms will continue as a trend that we will see, even if it is not necessarily through M&A,” he said. “In general, more integrated care is going to be better care. And I think we’ll probably see some creative solutions, perhaps for the payer as well.”

However, there are still Not enough mental health professionals to meet the needs of care. Aike Ho, a partner at ACME Capital, noted that many patients, regardless of the level of sharpness, still struggle to find care or afford it, even if they live in urban markets where suppliers are more.

But startups should not follow growth at any cost, he said. A spectrum looming above the digital mental health space is the cerebral, facing Growing controversy over its prescribed practice and a federal investigation into possible violations of regulated substance law.

Ho argues that quality will be an important factor for DTC companies, allowing them to expand with employers and providers in the end.

“I’m still a huge proponent of direct-to-consumer because, in some ways, I think direct-to-consumer companies produce a lot of great products for patients,” he said. “I think it’s easier to get out of a bad product when you’re selling to employers. Because you’re being paid by the employer, when customers, patients who are using it, tell employees there really isn’t a responsibility or the product itself is accountable.”

Jaffe says he sees advantages and disadvantages to the DTC approach because consumer experience is valuable, but patients may not be able to accurately judge clinical quality. Meanwhile, most healthcare costs are still on the ground with health plans and employers.

“But a lot of companies will grow their seeds, maybe theirs [Series] One outside the DTC model. Then they will try and raise B, C, say, ‘Hey, look at this promise we can make. Now, we’re going to sell the health plan. ‘ And that’s not really something that a health plan wants to include because of how the foundation was laid, “he said.

“So you have to balance how you can unlock the lion’s share of the dollar while maintaining the integrity of the consumer experience as it relates to behavioral health.”

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