As compelling use cases continue to emerge across the healthcare value chain, companies focusing on using technology to improve patient care are poised for significant growth. That’s especially true for those pioneering the use of telecommunications technology to provide care remotely.
In this article, senior Harris Williams professionals discuss current trends in what’s known as behavioral telehealth—the area of the broader telehealth sector that’s focused on mental health services—and the opportunities they create for strategic and financial buyers.
$15 Billion in Demand by 2026
Technology is reshaping many industries, including healthcare. New technologies are making it possible for healthcare providers to treat patients in entirely new ways—and, in some cases, with far better outcomes than what’s possible with traditional approaches to care.
A good example is the growing field of telehealth—and, more specifically, the sub-sector of behavioral telehealth, which includes providers that deliver psychological or psychiatric care remotely via telecommunication tools. The global behavioral telehealth sector is projected to become a $15 billion market by 2026, up from about $3 billion today (Figure 1).1
Figure 1: Anticipated growth in behavioral telehealth
Source: Global Behavioral telehealth Market, Data Bridge Market Research, May 2019
Several key factors are behind this growth. The most fundamental factor is that, today, there’s far greater awareness of mental health issues, such as depression, anxiety, and addiction, as well as clinical disorders, such as autism and other developmental disorders. There is also much less stigma attached to these common challenges, leading more people to seek treatment.
At the same time, however, there’s a growing shortage of psychiatrists and other mental healthcare providers, making it difficult to meet treatment demands. In fact, by 2025, demand is forecasted to exceed supply by as many as 15,600 psychiatrists.2
Along with these factors are two macro technology trends. First, telecommunications technologies continue to improve the intimacy and authenticity of conversations (both of which are critical to mental health treatment). Second, people are becoming much more accepting of the integration of technology into their daily lives, including healthcare.
“This is especially true of the younger population, who not only tend to be more in tune with mental health challenges, but also more comfortable communicating with a healthcare professional via video chat, Facetime, or text,” explains Dan Linsalata, a director in the Harris Williams Technology, Media, & Telecom (TMT) Group.
Finally, behavioral telehealthcare makes treatment more accessible. It’s more efficient and less time-consuming than in-person visits, which appeals to people’s ongoing desire for greater convenience in their lives. It eliminates the geographic barriers between people in regions that lack mental health resources locally and providers who can be anywhere in the world. And it’s less costly than in-person visits, which makes care available to more people with limited financial resources.
A Range of Revenue Models
The behavioral telehealth sector is poised for growth, and offers opportunities for buyers looking to get into or expand their footprints in the healthcare field. The most promising targets for buyers typically act as orchestrators of behavioral telehealth ecosystems or marketplaces, supplying solutions or platforms that bring together providers, patients, and payors.
Revenue models vary across these platforms. In some cases, services are billed to patients, often facilitated by healthcare providers; in others, they’re billed to providers as an outsourced service. At least one vendor generates the majority of its revenue from payors via per-member-per-month subscription fees, which give patients on-demand, 24-hour access to healthcare via mobile or desktop devices.
Some vendors directly engage with patients by helping to match them with appropriate providers. For instance, one vendor provides an online medical consultation platform that allows users to contact physicians in several ways, including posting health queries online or booking a slot for a video call with a qualified professional.
Others are largely invisible to patients, preferring to work closely with providers (for example, to help them build their telehealth program with their existing staff) or to contract directly with organizations that require psychiatric care (such as inpatient/outpatient and corrections facilities) to provide on-demand services via a pool of psychiatrists and nurses.
Three Key Characteristics of Promising Targets
Across these business models, buyers interested in the behavioral telehealthcare sector should consider three key capabilities when scouting prospective targets.
1. Engagement with the main constituencies
The most successful platforms are able to attract and accommodate providers willing to see patients virtually rather than in person, as well as patients willing to engage with the telehealth model. Thus, buyers should look for companies that have contracts in place with major providers and payors.
“Those that have the proven ability to negotiate mutually beneficial contracts with key providers and payors, at a significant scale, are much better poised today to capitalize on growing demand,” says Whit Knier, a director in the Harris Williams Healthcare & Life Sciences Group.
Buyers should also ensure that prospective targets have a well-defined patient population, such as those in a specific region or state, or those in rural areas with little to no access to mental healthcare resources, and can effectively reach that population.
Even more important is getting payors on board, who can set up the appropriate reimbursement schemes so treatment is included in a patient’s insurance. “Otherwise, patients are paying out-of-pocket for care,” Linsalata notes. “While that may not be an issue for some patients, it can leave a large portion of the population behind, especially those who most critically need these services.”
2. Navigation of regulatory complexities
A patchwork of regulations requires payors to cover services on a state-by-state basis, which can undermine behavioral telehealth’s main value proposition. “Part of telehealth’s promise is the ability for a provider in any location to see a patient in any other location,” says Knier. “But with differing regulations and reimbursement rules from state to state, growth-oriented platforms will need to find ways to deliver high-quality care on a regional or even national level.”
Therefore, capabilities that can help companies deal with the sector’s regulatory environment can make a target more attractive. “That could be a strong government relations arm that can help get them a seat at the policy-making table,” explains Linsalata. “Or it could be technology tools, such as specific modules built into platforms that help providers navigate applicable regulations governing electronic prescriptions for controlled substances.”
3. Delivery of outcomes
Finally, and most importantly, the most valuable targets are those that are making a genuine impact on patients’ lives.
Mental health issues—whether it's addiction, autism, anxiety, or depression—are, by definition, chronic conditions that require ongoing care and interactions with clinicians. Thus, anything that removes barriers to a patient’s first encounter with a clinician and continuing follow-up sessions can dramatically enhance results.
A behavioral telehealth platform enables initial and ongoing patient consultations to happen in a low-cost, scalable way. It integrates with all of a patient’s health records, so physicians can get a holistic view of the patient’s history and needs. And, because the platform supports a whole ecosystem of physicians, it can deliver the exact treatment each person needs, which means more tailored and effective care and no need for a patient to have to go to multiple providers outside of the system.
“At the end of the day, the goal of behavioral telehealth is to drive better clinical outcomes at lower cost,” explains Knier. “Behavioral telehealth improves outcomes because it makes it easier for providers to extend the continuum of care and their engagement with patients, more fully integrating care into their patients’ everyday lives.”
Knier adds that such integration is essential to minimizing the chance of backsliding after initial treatment, particularly for addiction treatment, where continual engagement is critical to helping patients with their recoveries. Behavioral telehealth can also reduce the incidence of costly ER visits by making care available in moments of crisis, he says.
As technology continues to sweep across the healthcare industry, advancements it makes possible stand to benefit tens of millions of people in the United States alone. Specifically, innovations in behavioral telehealth will make treatment and care far more convenient, efficient, affordable, and accessible to the growing number of people who need it.
For healthcare payors and providers, that drives reduced costs and better outcomes. For technology providers and their potential buyers, it creates opportunities. Providers of behavioral telehealth solutions and services are key to driving this change and, as such, represent impressive growth potential and investment opportunities for buyers interested in this emerging and compelling sector.
Published October 2019
1. Global Behavioral telehealth Market. Data Bridge Market Research, May 2019.
2. The Psychiatric Shortage, Causes and Solutions. National Council Medical Director Institute, March 2017.