The Next Phase of Behavioral Health Evolution: Rise of Behavioral Health-focused Infrastructure-as-a-Service Innovators

It is not an exhaustive representation of BH tech categories or companies; categories are not mutually exclusive; companies featured may have solutions across categories, including companies that may or may not sell/partner with other BH companies.

Electronic Health Record (EHR):

Let us start with the Electronic Health Record, the centerpiece of all technology platforms for any clinical care delivery organization. It was not uncommon to see BH providers either build a custom-built EHR or try to use an EHR designed for non-BH specialties. Given that BH providers have specific workflows and additional documentation requirements (e.g., there are additional documentation requirements for substance abuse patients, digital-first BH providers would like to send CBT exercises to patients via EHR/portal), we have seen the rise of two categories of new EHRs to address the needs of digital BH services providers. First, we have seen a rise in mental and behavioral health EHRs that have emerged to address unmet workflow and data capture needs. Investor-backed EHRs, such as Osmind (raised a $40M Series B round in 2022), Alleva (received a $12M Series A round in 2022), Qualifacts (backed by Warburg Pincus and Martis Capital), Valant (backed by Gemspring Capital and Sixth Street), and others, are gaining investor and commercial tractions. Other BH condition-specific EHRs, such as SpectrumAi (raised a $20M Series A round in 2023), have emerged to address unmet workflow and data capture needs. Second, we have also seen Modern/API-first EHRs, such as Canvas Medical (raised a $24M Series B round in 2022) and Elation Health (secured $50M in Series D financing in 2022), starting to expand into BH and serve as the base that R&D team at novel BH innovators can build upon. These two new categories of EHRs have profoundly changed how digital BH entrepreneurs need to get started. 

Practice Management, Credentialing, and Licensure Platforms:

Despite the overwhelming demand for BH services and the BH provider shortage across the United States, our existing healthcare system does not make BH providers’ life easier. According to a University of Massachusetts’ evaluation of “The Challenges of Private Practices” in 2015, 1 in 5 therapists seriously considered leaving private practice in the last twelve months. One of the biggest challenges facing private practice providers is the complexity of managing an independent practice and keeping up with various practice management tasks (e.g., patient recruitment, marketing, intake & scheduling management, billing/RCM, financing, employee benefits management). Additionally, our convoluted provider credentialing practices that vary from state to state further limit the supply of BH providers. Furthermore, we have a long and expensive therapist licensure process (e.g., pre-licensed therapists are often on their own when it comes to finding and paying for clinical supervision hours), which leads to therapists in training dropping out before they become fully licensed professionals. While these challenges are particularly acute for independent providers, new digital BH providers face similar challenges early on. In recent years, we have seen the rise of BH-focused practice management platforms, such as Grow Therapy (announced a $75M Series B financing in 2022) and Sondermind (raised a $150M Series C round in 2021), that bring full-suite of technology and services (including payer contracting services) to BH providers. Other companies, such as CertifyOS, Axuall, and Medallion could significantly shorten the provider credentialing processes and ensure they are licensed across states and in-network with payers. Platforms like Motivo Health (which secured a $14M Series A funding in 2022) could provide clinical supervision-as-a-service for companies with new therapists and therapists in training who require clinical supervision. The emergence of these practice management, credentialing, and clinical licensure solutions significantly lowers the operation complexity and startup cost of standing up new tech-enabled behavioral health service providers. 

Provider Staffing and Workforce Augmentation:

Given the aforementioned BH provider shortage and challenges, a new class of tech-enabled provider staffing and workforce augmentation companies emerged in recent years to help providers with BH needs meet their patient population’s demands. Virtual Health staffing and provider network management platforms (e.g., OpenLoop, SteadyMD, Wheel) that initially gained traction by providing flexible clinical workforce solutions for telemedicine companies. As demand for tele-behavioral health services grew, many platforms began offering flexible BH specialist service lines. For entrepreneurs building novel tech-enabled BH service providers or existing virtual health companies wanting to include tele-behavioral health in their care model, these staffing and provider network management platforms offering fractional and full-time BH provider staffing could significantly shorten time-to-market and lower start-up costs. In addition to these more generalist platforms, BH-focused workforce augmentation platforms (e.g., Hyka) have been started recently to help unlock latent supply and connect companies with BH provider staffing needs with BH clinics or individual providers with excessive capacity. Additionally, other tele-behavioral and telepsychiatry companies (e.g., Concert Health, Mindoula, Array Behavioral Care) that serve as network extenders and help enable collaborative care for provider practices, health systems, and hospitals could also be partners for emerging BH innovators that try to provide a comprehensive set of BH services for patients across the full-risk continuum.

Workforce Automation and Enhancement & Outcome Measurement:

In addition to augmenting the workforce, it is imperative for a BH provider to continuously improve clinician effectiveness and optimize client-therapist therapy time as a way to improve treatment outcomes and broaden access. Similar to challenges faced by other specialties, BH providers are plagued with heavy administrative burdens (e.g., compliance, case management, clinical documentation) before, during, and after sessions. This increased administrative burden often leads to provider burnout, exacerbating the already strained provider workforce. Perhaps even more detrimental, these administrative tasks often interrupt the sacred client-therapist time. With the movement toward VBC, providers will likely see increased demand for capturing additional measurements. To combat these challenges, several workforce automation companies have emerged. With the advancement in Generative AI and Large Language Models (LLM) in recent years, we have seen the emergence of BH automation platforms, like Eleos Health (raised a $40M Series B round in late 2023 and brought its total lifetime funding to $68M), that focus on leveraging BH-specific LLMs to create a nondisruptive way to turn conversations between therapists and patients into automated documentation. Other Generative AI clinical documentation vendors that have raised significant capital in 2024 (e.g., Abridge raised a $150M Series C, Ambience Healthcare raised $70M Series B) have directly or indirectly indicated that behavioral health/psychiatry is a specialty of focus. In addition to reducing administrative burden, these automation platforms (e.g., Ellipsis Health, Eleos Health) have shown promises of analyzing semantic and acoustic aspects of the speech, detecting patients’ depression, anxiety, and stress levels real-time, and providing real-time or near-real-time feedback to the clinicians to help improve patient outcomes. An early RCT trial done by Eleos has shown promise of better outcomes in AI-platform-assisted BH intervention for patients with depressive or anxiety disorder when compared to the treatment-as-usual group.  

Patient Outreach, Engagement & Outcome Measurement and Monitoring 

Unlike other healthcare disciplines, well-established biomarkers used to diagnose a disease or an event (e.g., Cardiac Troponin, Creatinine kinase, CK-MB, and Myoglobin can be used to diagnose a heart attack), mental health disorder diagnosis is less straightforward. According to the Cleveland Clinic’s website, there aren’t any medical tests that can diagnose mental illnesses. One of the most commonly used screening tools, PHQ-9, used by providers to identify patients with depression, was developed by a pharmaceutical marketer. Over the years, digital diagnostic companies using biomarkers have emerged. Instead of having to wait to be seen by a provider for a diagnosis, patients and providers can potentially use AI tools (e.g., AI-driven PROs) and digital diagnostics, such as voice analysis technology, eye movement detection, and other wearable technology to diagnose, triage, and track behavioral health conditions. Companies like Kintsugi (raised $20M Series A in 2022), Sonde Health (raised $19.25M Series B in 2022), and HealthRhythms (built based on the research done by Dr. Ellen Frank from UPMC and Behavioral Health Sensing Technology from Dr. Tanzeem Choudhury’s lab from Cornell Tech), are blazing the trail in creating novel digital biomarkers for screening and monitoring.

It is also worthwhile to highlight that AI-native technology platforms have the potential to go beyond patient engagement and monitoring. Companies like Woebot Health and others are developing digitized Cognitive Behavioral Therapy (CBT). While Woebot Health (raised $90M in Series B in 2021) is a rules-based conversational AI platform with evidence-based Cognitive Behavioral Therapy (CBT), Interpersonal Psychotherapy (IPT), and Dialectical Behavior Therapy (DBT) content, we foresee the emergence of Generative AI BH platforms in the coming years to augment clinical teams and provide around the clock patient engagement and monitoring.

Lastly, it is important to remember that engaging the broad healthcare ecosystem and patient support system is imperative to establishing successful ongoing patient engagement. The importance and involvement of family and caregivers are extremely critical from an outreach and ongoing care delivery standpoint. A number of caregiver support solutions have emerged over the years on the employer’s side. We foresee the emergence of caregiver companion solutions tailored to BH’s needs.     

Looking ahead

Despite the tremendous amount of progress we have made as a nation, the overall decline in mental health is one of the most urgent crises we face. In a KFF/CNN survey from 2022, an overwhelming majority of the public (90%) think there is a mental health crisis in the U.S. today. A White House Office-issued brief from 2022 states that half of the women and a third of men have reported worsening mental health since the beginning of the pandemic. In addition to the profound economic impact in the near term, the effects of mental health disorders can have generational economic and social ramifications. The problem is even more pronounced in sub-populations. The American Academy of Pediatrics published a report in December 2023 that highlighted that the unmet needs for mental health services are even worse for children who are racial and ethnic minorities. Addressing our mental health crisis is an essential part of addressing our national health equity gaps. 

Continued investments in behavioral health companies must continue, and digital health will play an essential role in addressing this urgent unmet need. In addition to mental and behavioral services companies continuing to receive substantial investor backing, we foresee that BH-focused IaaS companies will receive a disproportional share of venture investment. While no amount of funding in the near term will be able to close the gap and overcome this national crisis, we do hope that increased investments in both tech-enabled services and technology-enablement companies in the mental and behavioral health space will continue to help make a meaningful difference at the national, local and individual level.