The investment numbers continue to climb. In the year of the pandemic, digital behavioral health netted $2.4 billion in venture funding in the face of a four-fold increase in prevalence of depression and anxiety (see A Defining Moment For Digital Behavioral Health: Four Market Trends). And in the first half of 2021, digital health attracted an unprecedented $14.7 billion (topping all of 2020, with $14.6 billion total), with new startups as well as huge capital infusions for some of the well-known players, as mental health topped the list of investment areas (see Digital Health Funding Rockets Up To $14.7B, Speeding Past 2020’s Investment).

These digital first mental health companies are reshaping the behavioral health landscape in many ways—consumer service access, payer contracting, professional relationships, and more. We got a behind-the-scenes look at how they are changing the paradigm during our recent keynote panel, The Future Of Mental Health Service Delivery: Up Close & Personal With Ginger, Lyra, & Talkspace at the 2021 OPEN MINDS Strategy & Innovation Institute. Karan Singh, Co-founder and Chief Operating Officer at Ginger; Rachel O’Neill, Ph.D., Director of Clinical Effectiveness at Talkspace; and Sean McBride, Vice President of Partnerships at Lyra Health gave us new perspectives on their services and their market reach.

Ginger (started in 2011), Talkspace (started in 2012), and Lyra Health (started in 2015) all share a digital focus—providing on-demand mental health care through live virtual visits with clinical professionals along with an array of synchronous and asynchronous digital tools. Since that time, they have attained considerable market share. Ginger covers more than 25 million lives; Talkspace covers 55 million lives; and Lyra Health covers 2.2 million lives. Talkspace’s net revenue was $27.2 million in the first quarter of 2021, growing 144% over revenue in the first quarter of 2020 (see Talkspace Delivers Strong Q1 2021 Operational & Financial Results).

Despite this growth, many thought leaders in the health and human service field are skeptical. So, what is the secret of their popularity—how are digital first behavioral health companies attracting consumers, and what’s unique about the care experience they are offering? Why are investors pouring money into these companies? Why are health plans contracting with them? And, how are these companies attracting and retaining clinical professionals? Here’s what we learned.

What’s bringing in, and keeping, the consumers? Consumers are attracted by the rapid, easy access and the convenience of anytime, anywhere care. Intensive marketing is also “normalizing” mental health care. Lyra Health says the average time to complete a first appointment is five days. Talkspace offers a therapy session within one to two days of signing up. And Ginger offers “video therapy and psychiatry appointments within a few days.” All three companies offer an immediate connection with a coach, consultant, or care navigator.

As Mr. Singh and Mr. McBride both noted, digital first behavioral health organizations are taking the “friction” out of the care process. And at Talkspace, Dr. O’Neill said the goal is to “take what was once elusive and make it inclusive.” They have invested in marketing (celebrity partnerships, social media advertising, etc.) to decrease the stigma of mental illness and make it okay to seek help. Dr. O’Neill said, “As a result, 60% of Talkspace users are first-time therapy users, which really underscores how we have worked to open doors and give access to individuals who may not otherwise be able to obtain treatment or be willing to obtain treatment.”

Why are health plans contracting with the digital first companies? Digital companies have provided solutions to some of health plans’ biggest pain points—fast access to care, improved consumer engagement in care, evidence-based practices and outcomes data, and a willingness to engage in value-based payment models.

Mr. Singh said, “At Ginger, we believe in a system that’s measuring every interaction and measuring symptoms and improvement.” At Talkspace, Dr. O’Neill echoed the importance of measurement-based care and said, “We look at outcome measures to see whether or not individuals on our platform seem to be getting better, in aggregate. We use this data to help continually inform both the services that we’re providing, as well as the training and the onboarding of our providers. So we’re continuously looking at whether or not we may need to adapt our therapeutic service delivery, or if there are adjustments we can make in other areas.”

Ginger reported 59% improvement in anxiety and 70% improvement in depression for consumers using their services. Third-party research showed that 87% of Lyra’s consumers with depression or anxiety improved or recovered with their “blended care therapy”—a model comprising therapy services and digital self-care exercises recommended for a consumer’s specific needs. And 73% of Lyra consumers with suicidal ideation at baseline had no such ideation at follow-up. Further, 95% of consumers with stress improved their well-being.

Mr. McBride also shared how they are making whole person care happen—“A number of people who reach out to Lyra are younger folks who do not have primary care doctors today. Their entrance into the health care system is actually for mental health. We have physicians and psychiatrists and their objective is to help people with mental health needs, but they’ll do an initial 90-minute intake, and can really kind of serve as a medical quarterback for that person’s needs and help integrate them into the broader health care system as needed.”

Ginger has entered into a partnership with Accolade, a health care company that offers virtual and in-person primary care, care navigation, and care coordination services. Through their collaborative “Mental Health Integrated Care” program, clinical professionals and primary care physicians are able to interface through “rounds,” reviewing specific cases where treatment outcomes are not improving as expected. Being able to talk through why a consumer is not able to control their HbA1C, or recover from depression or anxiety, helps to adjust the care plan.

Ginger is starting to enter into pay-for-performance contracts with health plans where they can earn additional performance-based incentives based on the achievement of key performance indicators. But they are also working on creating new kinds of contracts that will allow them to innovate and “do more than just the 15-minute office visit.” And Mr. McBride said, “We believe strongly that a value-based utilization structure enables us to really focus on engaging those in need and getting them into the right levels of care. So in our employer contracts, payment is based on whether people actually get better. We’re piloting a number of case-based bundled payment arrangements. We provide our employer partners with complete transparency into what we’re paying providers. And then at the provider level, we pay bonuses based on whether they are actually seeing clinical improvement with their patients, as measured through validated outcomes assessments.”

What’s attractive to investors? Investors are interested in the mental health space for a variety of reasons including increasing demand for services in the wake of the pandemic, the fragmented nature of the market, and a favorable regulatory and reimbursement landscape—as we heard during the session, Achieving Size & Scale For Sustainability: When M&A Is The Right Strategy, at the 2021 OPEN MINDS Strategy & Innovation Institute from Jonathan G. Morphett, Managing Partner at Avondale Partners and Todd Rudsenske, Partner at Webster Equity Partners. In addition, the digital first companies’ rapid growth in marketshare and revenue has resulted in increased valuation, which is most attractive to investors.

In the first six months of 2021, $1.5 billion was invested in digital mental health—compared to $2 billion in all of 2020 (see H1 2021 Digital Health Funding: Another Blockbuster Year…In Six Months). And the latest initial public offering was from LifeStance Health, a startup offering a mix of virtual and technology-enabled in-person care for 357,000 consumers that went public on June 10, raising $720 million, with valuation at $8 billion (see Mental Health Startup Lifestance Goes Public As Insurers Add Benefits).

Talkspace went public on June 23, six months after entering into a partnership with a special purpose acquisition company (see Teletherapy Company Talkspace Hits Nasdaq After Completing SPAC Merger). Lyra Health has garnered $680 million in funding since its founding in 2015 and has a current valuation of $4.6 billion (see Lyra Valued At $4.6B, Plans To Build Out International Presence). Ginger, founded in 2011, has raised $220 million to date and is valued at $1.1 billion (see Ginger Banks Another $100M To Ramp Up Partnerships With Health Plans, Government Payers). Lyra Health has garnered $680 million in funding since its founding in 2015 and has a current valuation of $4.6 billion (see Lyra Valued At $4.6B, Plans To Build Out International Presence). Ginger, founded in 2011, has raised $220 million to date and is valued at $1.1 billion (see Ginger Banks Another $100M To Ramp Up Partnerships With Health Plans, Government Payers).

How do they recruit and retain clinical professionals? The digital first companies are not immune to workforce challenges that have been the bane of behavioral health for years. But their key to attracting and keeping clinical professionals is to provide high quality training, process automation, and clinical decision support through sophisticated, user-friendly technologies.

Mr. Singh said, “We are using technology to supercharge and augment our care providers based on over a decade of research and evidence. We’ve automated parts of the experience that are challenging—like note taking—for coaches and clinicians. They get ‘smart replies’ and prompts based on data that we’ve collected over the years to personalize care. Technology empowers our providers to be able to practice at the top of their skillset to be most effective at what they do.”

Talkspace provides training to ensure that clinical professionals “are trained and competent to deliver their therapeutic services and adapt their theoretical approach to work in the digital mental health space.” This training is available to the full-time employees as well as contracted clinical professionals that Talkspace works with to maintain agility and serve a range of consumer needs.

What about intrastate licensure? Dr. O’Neill said that at Talkspace, multistate licensure is at the top of the hiring criteria and if clinical professionals are willing to obtain multistate licensure, Talkspace is willing to assist in that process. At Ginger, clinical professionals—all full-time employees—practice in states in which they are licensed. And the company encourages cross-state licensure so their services can be leveraged across the country.

Mr. Singh said, “There clearly aren’t enough therapists to meet the need, which is why we fundamentally believe that coaches—who are not licensed therapists—can actually be a linchpin in this experience and they are an underused resource we are trying to leverage.” Lyra also relies on coaches as a key part of the care continuum. Mr. McBride said, “We look for coaches that have International Coaching Federation certification. But the biggest thing that we realized in this space is that we had to essentially develop our own training and certification program for our coaches. So all our coaches go through a multiple month training program on Lyra’s cognitive behavioral coaching program, because I think there’s a lot more ambiguity on what a coach does compared to a licensed mental health professional.” Lyra has contracted clinical professionals (and they are tracking to have at least 50% of them be exclusive to Lyra by the end of 2021) and one of the big draws they offer is ease of billing and reimbursement, which was a challenge when these professionals worked directly with health plans.

My takeaway—the digital behavioral health companies are not only competing for marketshare—and for clinical professionals—but they are also redefining consumer and payer expectations for the entire industry. Taking a page from their book and considering how to improve access, provide a seamless consumer experience, adopt data-driven approaches, and supplement and support the workforce with digital tools is becoming as essential as having an electronic health record or a telehealth platform. Thinking digital first is the key to sustainability in a shifting market.

For more on supporting your workforce with technology, check out these resources in The OPEN MINDS Circle Library:

• Clinical Documentation – When Its Good, It’s OK. When It’s Bad, It’s Very Bad.
• Adding AI To Your Digital Toolbox Can Add Value
• Consumers & Payers Are “Digitally Fluent” But What About Your Team?
• “Plussing Up” For The Digital Era: Robots Become Reality
• More Than A Geek Squad: What Tech Team Do You Need?
• Supercharging The Workforce With Digital Therapeutics
• Are We Ready For AI-Driven Care? It Depends…
• Making Your EHR Work For Your Team
• Data Doesn’t Have To Be A Four-Letter Word For Clinical Professionals
• Optimizing Clinical Decisionmaking With Technology

For even more, register now for Making The Right Technology Investments For Your Organization: An OPEN MINDS Executive Seminar On Technology Strategy, Budgeting & Planning on October 25 in Las Vegas, Nevada. OPEN MINDS Senior Associate, Ken Carr, will discuss how to develop a technology strategy that aligns with your organization’s strategic plan.