Demand far outstrips supply. Consumers want more of it, but there simply isn’t enough available for everyone to get what they want. A market with this description is a startup founder’s dream. And perhaps that’s why funding to back mental health technology startups reached $5.5 billion in 2021, a 139% increase year over year, according to CB Insights.
Talkiatry, an in-person, online, and in-network provider of psychiatry services is seeking to serve part of this unmet demand and received $17 million in funding last week to expand its unique model. The organization, which launched in New York in May 2020, is among the slew of digital health new entrants going after the overwhelming demand for behavioral health services.
As the market becomes increasingly crowded with potential solutions to serve the outsized demand for mental health solutions, how can incumbents separate the competitive signal from the noise to determine which innovators are worth watching?
We have a framework for that.
Below we put Talkiatry’s model to our six-question test, assessing its disruptive potential compared to the industry’s status quo behavioral health offerings. Understanding a model’s disruptive potential – or lack thereof – provides guidance for incumbents on how to respond.
1. Does it target people whose only alternative is to buy nothing at all (nonconsumers) or who are overserved by existing offerings in the market?
Yes. Behavioral health services are often inaccessible to those in need of care. This is due to either 1) cost, 2) access, or 3) both. First, many behavioral health services are not covered by insurance and many psychiatrists do not accept insurance. Together, this situation makes the cost to receive care exorbitant and unattainable for many. Second, if an individual’s insurance plan covers behavioral health services, access is often an issue due to the shortage of behavioral health providers in the United States. People often wait months to access care. Third, some individuals have to both pay out of pocket for care and wait a long time to access it.
Talkiatry claims that it has partnered with every major insurer across the country, totaling over 60 plans, which reduces the out-of-network cost problem. Consumers can also receive an initial appointment in less than three days. Wow.
2. Is the offering not as good as existing offerings as judged by historical measures of performance?
No, as compared to outpatient psychiatric services. Talkiatry employs psychiatrists, psychiatric nurse practitioners, and other behavioral health providers, so the level of service they provide is equal to what a patient would receive at an incumbent mental health provider’s outpatient office. Additionally, it is potentially better than what they’d receive at their primary care provider’s office if they sought out a prescription-based solution there.
Yes, if the patient needs an intense or immediate psychiatric intervention, such as emergency, in-patient, or partial in-patient care. Talkiatry only provides scheduled, out-patient services.
3. Is the innovation simpler to use, more convenient, or more affordable than existing offerings?
Yes. Talkiatry’s website provides an avenue to identify if they accept a patient’s insurance, determine which type of care they need, and select which provider they want to see in one place. This helps the consumer avoid multiple phone calls to the insurance provider and various service providers to see if they are taking new patients and accept the patient’s insurance. Talkiatry offers in-person and online access to psychiatric services, making it more convenient for an individual to choose the medium that works for them. Additionally, they are open until 8pm and have Saturday hours, which is not the industry norm. It’s more affordable for those with insurance, as it is covered by 60+ insurance plans, including Medicare. Talkiatry does not accept Medicaid at this time, so it is not more affordable for Medicaid members.
4. Does the offering have a technology that enables it to improve and capture a larger market over time?
Yes. Mental health service provision is a resource and time-intensive service. Understanding the patient’s history is a core component of being able to provide effective care. In most incumbent business models, this is done by a person. Talkiatry automates this process, as do many other mental health startups. Potential patients take an online assessment to receive a preliminary diagnosis, match with potential psychiatrists, select their care provider, and book an appointment online. This reduces the man-power, time, and administrative burden required to access care and to deliver it.
5. Is the technology paired with an innovative business model that allows it to be sustainable?
Yes. Talkiatry seems to be a leader in addressing psychiatrists’ needs and jobs to be done, which creates a competitive advantage in a market dominated by psychiatric labor shortages. They’ve designed their business model around simultaneously serving the needs of the market’s most limited resource (providers), understanding customer (insurance provider) demands, and making it easier and more affordable for the consumer to access care. By partnering with so many insurance companies, they have a reliable revenue stream.
6. Are existing providers motivated to ignore the new innovation and not feel threatened by it at the outset?
Yes. Mental health demand outpaces supply by such a large margin, incumbent players are likely to ignore Talkiatry and other models like it at the outset. This is a mistake, most notably because of the incumbent’s potential loss of psychiatric providers, but secondarily for its potential loss of patients. Talkiatry has built a clear value proposition to attract the leading psychiatrists, and to date they employ over 140 physicians, 83% of whom applied on their own accord. When supply for the service is constrained by the number of providers, those who can attract and retain the providers will be poised to capture consumer demand.
Based on the six-question assessment, Talkiatry’s business model has disruptive potential as it seeks to serve the growing demand for mental health services. Combining an accessible and technology-enabled business model with an approach that simultaneously addresses customer, consumer, and provider needs, Talkiatry is likely to be a winner in the marketplace for mental health services. As the market continues to grow and consolidate, they are one to watch.
