Startups taking new approaches to mental health just raised $588 million, and they’re signing on huge customers like Boeing and Starbucks

  • American workers are struggling to cope with the coronavirus and civil unrest, studies have shown. 
  • Companies are implementing mental-health services to help with that.
  • Startups providing virtual mental-health options raised $588 million in the first half of 2020, a record amount as interest in the space grows. 
  • Visit Business Insider’s homepage for more stories.

The coronavirus has changed a lot in a short time, and Americans’ mental health has taken a serious hit. 

One survey by the Centers for Disease Control and Prevention found that 39% of respondents living in the US showed signs of anxiety or depression during the first week of July, a fourfold increase since this time last year. 

In a survey by the mental-health startup Lyra Health and the National Alliance of Healthcare Purchaser Coalitions, which represents 12,000 mostly self-insured employers, more than 80% of its 1,200 respondents said they experienced mental-health issues because of the pandemic, and 64% said the same about the killing of George Floyd and the national unrest that followed.

As a result, employers are finding themselves in the position of supporting especially exhausted workforces in the middle of a recession. Most workers get insurance through their employers. It’s in that capacity that many companies are turning to startups, programs, and apps to bolster whatever resources they have available for employees.

At the same time, startups offering online counseling and mental-health services are getting a huge influx of cash from investors, according to Business Insider’s reporting and a midyear industry report by Rock Health. In total, the startups have raised $588 million since January, a record amount.

Read more: VCs just poured $5.4 billion into startups forging the future of healthcare. Here are the 11 top digital health startups that took home the most cash.

Companies are turning to mental health startups to support their employees

Lyra Health, a startup that pairs users with a treatment plan that can include online or in-person therapy, has signed nine new customers, including Starbucks and Morgan Stanley, since outbreaks started. Some of those relationships began before the pandemic hit, a spokesperson told Business Insider.

Boeing and the Self-Insured Schools of California, a large network of 400 school districts that pay for teachers’ insurance, have similarly tapped Vida Health, a startup that helps people manage mental-health and chronic conditions.

SISC launched Vida in April, coincidentally in tandem with outbreaks, but about 1,700 school workers have signed up since then, while they cope with new stressors to already stressful jobs, benefits coordinator Nicole Henry said. 

“Teachers are now teaching from home. Budgets are not looking good, and the whole world’s changing right in front of us. We just felt a need to provide continued access to mental-health benefits, and we needed to do so in a fashion that was remote,” Henry said.

The meditation and sleep startup Headspace has seen a more than 500% increase from companies seeking support for employees, a spokesperson said. Hewlett Packard Enterprise added the app in April, and overall downloads have doubled since mid-March.

Vida, Lyra, and Headspace are among those that raised millions in the first half of 2020. Headspace has raised $140 million in financing across two funding rounds earlier this year. Lyra raised $75 million in March, while Vida raised $25 million in April.

Employees are increasingly using the mental-health services

Employers’ efforts to support employees’ mental health can appear disingenuous. In Lyra and the National Alliance’s survey, 40% of respondents said they believed their employers didn’t care about their mental health beyond their ability to be productive

Even so, people seem to be giving new mental-health services a chance, according to Collective Health, a company that helps employers manage health plans for about 250,000 members.

From February to April, virtual mental-health visits in Collective’s network of companies increased from about 1% to roughly 30%, decreasing since then to about 15% in June as people went back to in-person appointments, Dr. Sanjay Basu, Collective’s director of research, told Business Insider.

Employers also introduced more generous mental-health plans and benefits as a result of the coronavirus, and daily users of related apps doubled since this time last year, for a total of 8%, he said.

As for whether they’re helping, the jury is still out.

A large portion of users come to behavioral-health apps after an acute episode like getting fired or losing a loved one, then drop off after a few visits, Basu said. The apps can also take varying approaches to the same treatment, like cognitive behavioral therapy, which skews the data.

“The bottom line from these analyses is that the virtual mental health space is probably the space with more heterogeneity in quality than any other space we’ve honestly seen,” he said.

Lyra's patient interface
One of Lyra’s patient interfaces.
Lyra Health

Employers have been caught ‘flat-footed’

The US was already in the middle of a mental-health crisis before the pandemic, Business Insider’s Kimberly Leonard reported. And the rise of telehealth hasn’t been enough to keep some mental-health clinics open, even as more people show signs of depression and anxiety.

Read more: ‘We were already in crisis’: Mental health clinics are switching to phone visits and struggling to stay open during the coronavirus pandemic, just as more people need help. 

Meanwhile, employers don’t have a perfect track record when it comes to fostering open conversations about people’s mental well-being in the workplace. That’s only compounded for employees of color, particularly the Black community, which has been disproportionately affected by the pandemic and recent protests.

Some are turning to startups for basic advice. Lyra has been helping human-resources professionals craft emails and handouts addressing the current crisis and talk to employees about what’s a very uncertain future, Dr. Joe Grasso, Lyra’s clinical director of partnerships, told Business Insider.

“Employers have good intentions, but many have been caught flat-footed,” Grasso said. 

He has suggested they offer more flexibility around deadlines and schedules. Other strategies include pairing employees with providers who share the same cultural background, and managers could work with resource groups that reach Black employees, Grasso said.

Michael Thompson, the CEO of the National Alliance, said tangible programs were well and good but not a substitute for openness and caring toward workers.

“It’s not just about the benefits app or the benefits program,” Thompson said. “Frankly, those are more secondary than those fundamental people management skills that ultimately mitigate how people feel about the environment.”

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