How Psychotherapy Practice is Being Transformed to High-Profit Managed Care

Last update: August. 2022 

Over the past 20+ years, most Healthplans failed to provide cost-of-living or cost-of-practice increase in psychotherapists’ compensation. A modest 1.5% increase per year would have yielded 35% increase in psychotherapists’ incomes.

One reason psychotherapists have not adopted alternative payment methods (APM) such as measurement-based care (MBC) and outcome-informed care (OIC) is that they cannot afford the costs. Another reason is that the Affordable Care Act (ACA) of 2010 offered incentives for adopting MBC/OIC applied to medical providers, not clinicians who offer psychological, counseling, or behavioral health services.

Healthplans’ customers are employers and State funding sources that want data which demonstrates the value and effectiveness of Healthplan-paid services. Healthplans are not satisfied by research that has repeatedly confirmed the economic worth of psychotherapy. Healthplans want current data to offer value-based plans to employers and government programs.

Psychotherapists understand that psychotherapy must center on the individual circumstance of each patient and recognize that effective patient-therapist alliance is the most significant factor in psychotherapy outcome.

Venture Capital Companies in the Mental Health Marketplace

The economic worth of psychotherapy for the healthcare sector is that psychotherapy reduces medical costs.  Medical cost-offset research has demonstrated this fact for decades. Recently Cigna’s research found that when psychotherapists treat patients for at least 3 appointments and fewer than 14 appointments, the savings to the Healthplan in medical and prescription costs is between $755 to $1377 per person the first year. Improvements for 75% of patients occurred in the 3 -14 session window. 25% of patients continued for longer terms. Medical cost-offset calculations for care beyond 14 sessions were not part of the Cigna report. (This is pre-pandemic data.)

Restricting the average duration of treatment provides net savings. One thousand providers each treating 25 patients per week in the 3 to 14 session pattern can save a Healthplan 18.9 to 34.4 million dollars.

New Venture Capital (VC) companies have recently emerged. These million and billion-dollar digital platform companies compete with independent-practice professionals and contracted-employee groups for mental health patients.

Venture Capital (VC) companies have marketing and advertising resources private practice and contracted-employee groups do not. The VC companies have come into the market to employ therapists, to compete with Healthplans for employers’ dollars, or to serve Healthplans, or hoping to be purchased by Healthplans.  How many of these VC companies have Healthplans among their investors is not clear.

Some new VC companies, offer mental health providers digital services including billing, assessment, appointment scheduling, and teletherapy portals while they also offer the public prescription services, coaching, text or email contacts, counseling, and (very) brief psychotherapy. VC companies will offer to buy contracted-employee groups. (Big fish eat little fish.)

Digital mental health services funded by venture capital cannot be just “successful.” They must WIN BIG or will fail because of the hyped investor-expectations they create.

The only way that the huge profits (that VC companies promise their investors) will happen requires VC companies to take control of psychotherapy services, reduce psychotherapists’ fees-for-service and/or increase the numbers of patients treated in brief episodes.  VC companies cannot afford to address psychotherapists’ ethics, values or the importance of relationships created between therapists and clients.  VC companies will not hesitate to create policies that inflect moral injury on patients and psychotherapists. Psychotherapists are responsible for the policies they follow, not VC companies or Healthplans.

Can VC increase access to care, improve outcomes, coordinate care with physicians and make a fortune at the same time? What will happen to patients and employed therapists when a VC company fails or is purchased by another company?  

VC companies work to convince Healthplans they can manage every aspect of psychotherapy practice, asserting that their technology and management strategies will dramatically improve outcomes. They assert that the management demands they place on psychotherapists will save millions of dollars.

The increase of profits and value that these VC companies seek depends upon their convincing therapists to leave independent practices and become employees of the VC companies.

Digital mental health “unicorns”

Unicorn is a term used in the venture capital industry to describe a new company with a value of more than $1 billion. The term was in 2013 coined by venture capitalist Aileen Lee.

According to the American Psychological Association (APA) venture funding is pushing technology to a central spot in the mental health landscape. APA believes there is opportunity to ensure that these interventions are ethical, inclusive, live up to their claims, and help people get better.  How to do that has not been defined.

Valuations of eight mental health start-up unicorns

  1. Lyra Health $5.85 billion

  2. Cerebral $4.8 billion

  3. Ginger $3.1 billion

  4. Genoa $2.5 billion

  5. Modern Health $1.2 billion

  6. Calm $2 billion

  7. Talkspace $1.4 billion

  8. Modern Health $1.2 billion

For current funding and valuations information see:  www.CrunchBase.com 

Among the many areas of concern about these VC ventures is a lack of legal mandates or available avenues for clinicians to report their negative experiences working for companies funded and directed by venture capital investors.

Healthplans are financially motivated to possess all patient-provider data possible. Venture capital investors want the highest return on their investment. VC companies are paid to provide Healthplans with patient-provider data.  Some require real time visible access that VC companies are happy to provide for a price.

 Asking themselves the following questions can help mental health professionals choose wisely when they consider digital platform employment:

  • Can psychotherapists maintain patient-centered ethics and standards of care when they choose VC employers?

  • Can psychotherapists entrust their licenses and reputations to VC companies?

Cerebral announces layoffs as part of operational restructure amid federal investigation. When things like this happen, what are psychotherapist responsibilities and the challenges they face? For one thing, psychotherapists must retain 100% control over confidential health information to protect and advocate for patients. So, ask: What does this company’s contract stipulate concerning responsibility for clients’ private information? (i.e., their symptom reports, and their clinical change data.)

For more information see:
https://www.fiercehealthcare.com/health-tech/cerebral-announces-layoffs-part-operational-restructure-amid-federal-investigation

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