Mental health has attracted the most private capital as a clinical indication area for the last 4 years, amid record-breaking funding across digital health, according to Rock Health’s recent 2021 Year-End Report. There are many opportunities for technology to play a role in advancing the behavioral health needs of patients, but as investors, we’ve been very intentional with where we’ve placed our bets in the space. For a long time, we were searching for a solution that could balance affordability, access, and outcomes as the keys to delivering quality service- with none of these individual factors taking priority as then incentives may shift away from what’s best for the patient.
In January of 2022, that search led me to lunch with Sahil Choudhry, CEO and Co-Founder of Handspring Health. Handspring Health is building a vertically-integrated and omnichannel behavioral health center for children and families that includes both virtual care and modern clinics. Since that meeting, the company officially launched in New Jersey and announced a $6.2M Seed round, co-led by NVP. Now, its working to hire clinicians rapidly in order to provide quality care to more families and children.
Handspring initially caught our attention because it fits the mold for what we expect of the third wave of mental health care unicorns. Until now, we have seen 2 stages of digital mental health companies succeed: 1) direct-to-consumer apps aimed to democratize and destigmatize therapy (i.e., Calm, TalkSpace, BetterUp), and 2) those with a focus on distribution via employers (i.e., Ginger, Modern Health, Spring Health, Lyra). In line with our broader investment thesis that adoption of consumer-centric, digital-first models will inevitably be adopted by traditional health care payors and providers, a third-wave of high-growth mental health companies have emerged with an in-network payer strategy. Furthermore, the growth of mental health solutions to date have focused primarily on access and not outcomes. We believe that, by prioritizing data and outcomes measurement on the patient and provider side, Handspring can be a leader among the next evolution of digital mental health companies.
Of course, distilling down this abstract view of the ecosystem is easier said than done. This is where Sahil Choudhry and Kwasi Kyei’s years of experience across the healthcare industry give them a distinct edge. As proud investors of many first-time founders, we like to see a strong combination of past experience that can act as an advantage as operators. In this case, experience within the strategic investment arms of some of the most innovative health plans not only gave this team exposure to the inner workings of payors but also allowed them to learn from a number of leading digital health companies like AbleTo, Octave, and Ginger from board positions. Rounding out this powerhouse duo are clinical and product team leaders from Montefiore Health System, Genoa Telepsychiatry and UCLA Neuropsychiatric Hospital just to name a few.
In December 2021, U.S. Surgeon General Dr. Vivek Murthy issued a new Surgeon General’s Advisory to highlight the urgent need to address the nation’s youth mental health crisis. Before the COVID-19 pandemic, mental health challenges were the leading cause of disability and poor life outcomes in young people, with up to 1 in 5 children ages 3 to 17 in the U.S. having a mental, emotional, developmental, or behavioral disorder. Additionally, from 2009 to 2019, the share of high school students who reported persistent feelings of sadness or hopelessness increased by 40%, to more than 1 in 3 students. Between 2007 and 2018, suicide rates among youth ages 10-24 in the U.S. increased by 57%, and early estimates show more than 6,600 suicide deaths among this age group in 2020. The COVID-19 pandemic further altered their experiences at home, school, and in the community, and the effect on their mental health has been devastating.
On top of rising demand, we are facing a significant supply shortage of providers that specialize in pediatric mental health. A 2019 study in the Journal of the American Medical Association found that 7.7 million U.S. children had a treatable mental health disorder, but only half were being seen by a mental health professional. For those who do seek care, appointments often come with months-long waits. In many cases, while specialty providers want to service a diverse patient pool many do not accept insurance because cash-pay rates are too attractive and insurance reimbursements are not only lower but are an administrative burden. These issues have shifted the onus of treatment to pediatricians and family physicians, who often resort to prescribing medication or referring to an ED, which have devastating downstream impacts on healthcare costs.
Handspring solves for these needs. As a modern clinic for children and families Handpsring provides quality behavioral health care that is more accessible, available, and affordable. The tech-enabled pediatric behavioral health practice employs a hybrid-care model with virtual-first onboarding and in-person options for high need patients. By focusing on being in-network with payers, Handspring can help serve a more diverse pool of patients, while receiving favorable payor reimbursement rates from its outcomes-driven model. Handspring will leverage technology to increase access to care, improve practice efficiencies, deliver a superior provider experience and measure effectiveness of its care model. We are incredibly excited to add Handspring to the NVP portfolio and to support this critical mission.
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