How Headspace Health is tackling the global mental health crisis

In this weekly CNBC series, the companies that made the first Disruptor 50 list 10 years later are featured.

In 2013, the idea of ​​a mental health app might have seemed groundbreaking, if not monumental in terms of a global challenge for a disruptive startup. But times have changed. With a global pandemic that has led to a massive spike in mental health issues and the accelerating adoption of high-tech medical services, what startups like Ginger.io set out to do more than a decade ago seems ahead of its time.

On a global scale World Health Organization it is estimated that about 1 billion people live with mental disorders, and that the vast majority of them are in low- and middle-income countries where mental, neurological and substance abuse disorders are not treated at all. The imbalance between supply and demand for mental health care has risen sharply since the Covid-19 pandemic. One Lancet study estimates that there will be 53 million additional cases of major depressive disorders and 76 million additional cases of anxiety disorders worldwide in 2020.

Ginger.io, which grew out of the MIT Media Lab’s health data collection and analysis team, was named to CNBC Disruptor’s first 50 list in 2013 for its leadership in creating data-driven, on-demand digital mental health. ecosystem. This is became a unicorn in 2021 following a $100 million funding round led by Blackstone.

At the time of the deal, Ginger’s income has tripled year-over-year for three consecutive years, and has over 500 employer clients including Paramount, Delta Air Lines, Domino’s, SurveyMonkey, Axon, 10x Genomics and Sephora, and deals with a corporate concierge. by Accolade Health Service and the upstart Capsule Online Pharmacy.

The company said demand for its services tripled during the pandemic, but as the mental health problem has grown, startups addressing the issue have also had to scale. At the end of 2021, Ginger teamed up with an app-based business that many people seeking tranquility during Covid have come to know about: the Headspace meditation app.

The $3 billion Headspace Health and Ginger merger was part of a broader trend of consolidation in the digital health space and a move by disparate health technology companies to bring together a full suite of services under a model known as value-based care. CNBC’s other original Disruptors – Castlight Health, which teamed up with Vera Whole Health, and Audax (now part of health care giant UnitedHealth’s Optum tech business) – were among a recent spate of deals between some of the best-known medical technology startups. Virgin Pulse and Welltok. Reward for purchasing PlushCare. Grand rounds and Doctors on Demand. Teladoc and chronic care company Livongo.

The combined Headspace-Ginger company is helping nearly 100 million lives in more than 190 countries through a consumer-facing business and more than 3,500 business and health plan partners.

“The increase in needs is staggering,” said Russell Glass, CEO of Headspace Health. “You’ve gone from 20% [U.S.] of the population with up to 40% need, i.e. doubling the number of those experiencing acute anxiety, depression or other mental health needs.”

Headspace Health customers include Starbucks, Adobe, Delta Air Lines and Cigna.

“Mental health is clearly a global issue,” said Karan Singh, COO of Headspace Health. And it’s a challenge that includes the complexity of the business, from the various regulations around the world to the language needs. “Everyone can use their own language to describe what they’re going through, but that’s what most people go through,” Singh said.

In the US, as the pandemic continues and regulations evolve, Headspace Health faces the challenge of getting lawmakers to consider telemedicine in the same category as traditional healthcare.

The Biden administration is focusing on mental health among other health care priorities, including plans to ease restrictions on the practice in virtually several states, a move that Glass says is long overdue and critical to building a mental health infrastructure that is economically, racially and geographically equitable. respect. .

“Resolving this crisis should and can be our next JFK moment of success,” Glass said.

“I do think that we will need some structural changes to ensure that some of the gains that we have seen over the past few years actually continue,” Singh added.

Virtual care has become a powerful and effective way to access help, and many people prefer it to in-person care, or at least have a choice.

“The cat came out of the bag,” Glass said. “As consumers realize how amazing telemedicine is, and as governments get more and more information from these consumers, we’ll see things change.”

Glass compares Headspace’s current regulatory struggle to that faced by Uber and cites how consumer preferences have driven regulatory change.

But the digital health space is facing sharper market challenges as its post-pandemic scenario is being questioned, as evidenced by Teladoc’s disastrous earnings results this week, including a write-down of more than $6 billion tied to the Livongo acquisition. The market value of some of the biggest names associated with digital health has declined over the past year, including Teladoc, Hims and Hers Health and American Well, as core telemedicine services become a commodity and market opportunities among corporate buyers and insurers willing to pay more for a full suite of digital health services seem less certain.

Headspace Health sees a place for both competitors and new deals.

“We want to transform mental health care to improve the health and happiness of the world. We’re not going to do it alone,” Glass said. “A healthy competitive environment is critical to achieving what we want.”

Earlier this year, Headspace acquired SayanaAI-driven wellness company that is further expanding its range of services and care to its portfolio.

As it attempts to increase access to mental health services, the ultimate goal is to reduce costs.

“How can we reduce care costs? How do we prevent people from needing higher levels of care?” Glass said.

Singh answered. “Focus on prevention. Ultimately, this is the only way out,” he said.

—Zachary DiRenzo Special for CNBC.com