We all face personal and work-related challenges that affect our emotional and mental states: relationship issues, conflict at home or work, addiction, sleep difficulties, trauma and grief are just a few examples. The impact on our mental health can range from minor (e.g., stress, irritations and worries) to very severe, such as anxiety attacks, depression, and suicidal thoughts/behaviors in the worst cases. Some people cope with chronic conditions (e.g., bipolar disorder, OCD and clinical depression) which can be debilitating without professional support.
We believe that a global mental-health epidemic has been looming for years and our emotional health has been overlooked for too long. Consider the numbers: One in five adults suffers from a mental-health issue in the U.S. and roughly 60% of them don’t receive care of any kind, according to the National Alliance on Mental Illness. Mood disorders are the most common cause of hospitalization for people in the U.S. under the age of 45 (excluding hospitalization relating to pregnancy and birth), according to the alliance. And across the U.S. economy, serious mental illness costs nearly $200 billion in lost earnings each year – and this is only a fraction of the direct medical costs mental health issues place on our healthcare systems. The numbers around mental health are staggering and only worsening due to heightened stress at work, increased screen time, and of course this year, the impact of COVID-19.
Compounding this issue is the fact that the mental healthcare system is strapped and unable to support all those in need. There are a few structural reasons for this: First is the exorbitant cost of care. The mainstream care modality is therapy, but the average therapy session costs $75-150. This cost is even higher in urban areas like San Francisco or New York, which makes traditional therapy out of reach for most people. In addition, a significant percentage of mental-health providers do not accept insurance because of the low reimbursement rates and the high administrative burden of working with health plans. This further restricts care to just those who can afford it.
Second, there is an extreme shortage of professionals trained to deal with mental-health issues. Approximately 65% of U.S. counties do not have a single psychiatrist, and around 50% do not have a single psychologist. When professionals are available, wait times are often several weeks to months for the highest-quality providers. Fundamentally, there is a massive demand and supply imbalance in mental healthcare.
For these reasons, the only practical option for most people to receive care is if it is covered by their employer. However, health plans have historically been much less focused on providing quality mental-health offerings, resulting in thin networks of providers and extended wait times. Many companies have attempted to fill this void by supplementing their health plans with Employee Assistance Programs (EAPs). A challenge with EAPs, however, is that their utilization rates are notoriously low: The national average is 3.5% with many companies hovering below that based on our diligence. In other words, less than 4 of every 100 employees who have access to the service actually use it any given year. This is not entirely surprising, as traditional EAP services are difficult to navigate and often are too complex and cumbersome for most employees. Furthermore, many EAPs started as telephonic hotlines and have not transitioned their service to cater to our now digitally native society.
A problem of this magnitude and with few viable solutions typically presents a huge opportunity for disruption and business innovation. More broadly today, we’re seeing technology play a meaningful role in our physical health and fitness – evidenced by companies like Teladoc (NYSE: TDOC, ~$29 billion market cap); One Medical (NASDAQ: ONEM, ~$5 billion market cap); and Peloton (NASDAQ: PTON, ~$34 billion market cap), per CapIQ data–and we think that mental health is next. Fueling this trend is the prevalence of virtual care via telemedicine/teletherapy, the dissipating stigma around mental health, and public policy changes that strive for parity of mental-health coverage with physical health.
It is for all these reasons that we are very excited to announce today that Battery is leading the $51M Series C financing for Modern Health*, a fast-growing mental-health benefit solution for employees. Over the last three years, Modern Health has built a comprehensive, global platform predicated on evidence-based principles with therapists, coaches, and digital content accessible all in one app. As a global provider, Modern’s network of care providers support more than 35 languages in over 30 countries. The company has worked tremendously hard to deliver evidence-based care efficiently (averaging 12 hours to match with a therapist) and with high quality (4.95 / 5 average provider rating), which has manifested in an experience employers and employees love.
What really impresses us about Modern Health’s platform is its holistic approach to care. It offers solutions that cover the full spectrum of needs within an employee base – ranging from evidence-based digital content, to coaching and professional therapy. This approach has myriad benefits compared with the accepted status quo: It broadens member access to care, lowers cost, and provides a continuous and preventative solution. The results are very clear: Modern Health’s customers experience engagement rates that are far superior to their incumbent EAPs (to the tune of 6x, according to the company) and see strong clinical outcomes, proving it works.
COVID-19 has greatly accelerated the market’s demand for mental-health solutions like Modern Health. A study conducted by the CDC showed that 31% of U.S. adults reported symptoms of anxiety disorder and/or depressive disorder in June 2020 (vs. 11% during the same period in 2019). More than ever before, companies are feeling the need for mental health solutions from their employees and Modern Health has been racing to fill this demand. Today, Modern Health is working with more than 170 clients, including companies like Electronic Arts (EA), Lyft, Pixar, Rakuten, and Zendesk, just to name a few. Our belief is that employer demand for dedicated mental-health solutions will continue to grow and that mental health will soon be widely thought of as the fourth pillar of core corporate health benefits, alongside medical, dental and vision.
While we are extremely excited by the company’s growth, we are even more excited about the team behind Modern Health, led by CEO Alyson (Friedensohn) Watson. Alyson had spent her entire professional career in healthcare prior to founding Modern Health, including working in healthcare strategy consulting at PwC, healthy behavior change management at Keas (acquired by Welltok), and partner point-solution integrations at Collective Health. She is an incredibly ambitious, passionate, and hands-on founder who has built a similarly impressive team with whom we are thrilled to collaborate and partner. We are deeply honored to be partnering with Modern Health and look forward to helping the company achieve their stated mission of “helping as many people as possible learn the tools for mental wellness and resilience.”
Battery Ventures provides investment advisory services solely to privately offered funds. Battery Ventures neither solicits nor makes its services available to the public or other advisory clients. For more information about Battery Ventures’ potential financing capabilities for prospective portfolio companies, please refer to our website.
*Denotes a past or present Battery portfolio company. For a full list of all Battery investments, please click here. No assumptions should be made that any investments identified above were or will be profitable. It should not be assumed that recommendations in the future will be profitable or equal the performance of the companies identified above.
Content obtained from third-party sources, although believed to be reliable, has not been independently verified as to its accuracy or completeness and cannot be guaranteed. Battery Ventures has no obligation to update, modify or amend the content of this post nor notify its readers in the event that any information, opinion, projection, forecast or estimate included, changes or subsequently becomes inaccurate.