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2023 Going Digital Health’s Behavioral Health Tech Conference: Key Investment Takeaways
Monday, November 27, 2023

This year’s Going Digital Health’s Behavioral Health Tech Conference (GDBH) was well-attended and rife with insightful panel presentations and discussions featuring key players from across the behavioral health and substance use disorder treatment sector, including providers, payors, digital health and tech companies, investors, and researchers.


In one key address, a five star panel of venture capital investors comprised of Bill Geary (Flare Capital), Alyssa Jafee (7Wire), Liam Donohue (406 Ventures), and Molly Maloney (General Catalyst) laid out their plans and predictions for the coming year for both existing behavioral health portfolio companies and possible new investments. Not surprisingly, a dominating theme was the challenging fund-raising environment for new and existing platforms.


The panel’s prediction was that new breakthrough companies as well as more mature “D” round and beyond operators would still thrive in the current market but the vast majority of companies “in between” would be challenged by more restrictive funding and the goal to profitability. Companies with clarity around a problem to be solved, strong teams, and measurable, evidenced based outcomes, will continue to draw capital. However, as compared to the past two years of rapid growth and unprecedented investment, investors in the current market may spend more resources to evaluate risk, business models, and objective performance indicators.


The panel noted that a proliferation of demographic (e.g., teens or seniors) and condition-focused (e.g., eating disorders, post-traumatic stress disorder, obsessive compulsive disorder) platforms over the past few years could indicate that the digital behavioral health market is reaching maturity. The emergence of “private to private” deals that might combine these niche clinical targets with others under one roof struck the panel as a highly likely scenario over the ensuing quarter, through 2024, and beyond. These types of combinations could broaden access where labor markets are tight while proving for a wider range of behavioral health solutions to both consumers and employer plans looking for one stop service.


Counterbalancing the above, increased interest from health plans and payors seeking to integrate behavioral health and primary care is expected to reduce expensive inpatient treatment and costs related to co-morbidities. Furthermore, new rules proposed under the Federal Mental Health Parity and Addiction Equity Act, if finalized, are expected to contribute to positive funding trends over the long term.


Access to treatment issues remain a main concern of investors. Most see tech solutions to workplace management issues as a key focus for investments in behavioral health. Overall, there is an interest in platforms that can provide the right intervention, at the right time, and at the most convenient location for patients, in a cost-effective way.


As an example provided by a panelist, in addition to their announced whole hospital acquisition, General Catalyst has several strategic relationships with hospital systems that are leveraged for the benefit of their portfolio companies. Some key themes of those relationships include:


  1. Workforce transformation,
  2. The virtual continuum; bridging the gap between care and therapeutics,
  3. Consumer focus,
  4. Shift to value, and
  5. Administrative automation.

An area of deep discussion was the difficulty of creating (and the associated costs with) a uniform data set of outcomes that health plans would endorse and warrant for greater reimbursement. The difficulty of tying behavioral health services to decreases in medical care and costs are subjective and riddled with multiple vectors that impact outcomes. Nevertheless, investors have seeded companies that have identified payors willing to partner by providing data and funding pilots or discrete projects to establish proof of concept for a subsequent scale up.


Key Takeaway. The 3000 people in attendance at this year’s GDBH and the high quality of discussion bodes well for the future of behavioral health investing and expansion.

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