Headway, a startup that connects patients with mental health providers covered by insurance, picked up $125 million in fresh funding to build out its provider network to all 50 states.
The series C round boosted Headway’s valuation to more than $1 billion, catapulting the startup to “unicorn” status, according to the company. Spark Capital led the round along with backing from Andreessen Horowitz, Accel and Thrive. The startup, which was backed by GV (formerly Google Ventures) in previous rounds, raised a $70 million series B round in May 2021 and picked up $26 million in series A funding in late 2020.
This latest round of capital will go toward investing in technology and tools to help mental health providers grow their practice, Andrew Adams, co-founder and CEO, wrote in a blog post.
“We have plans to make Headway available to individuals seeking care in all 50 states and the District of Columbia very soon, and will be building products to help providers deliver care across state lines in 2024. We’re also further investing in ensuring patients have a simplified experience understanding their insurance benefits and changes, with excellent visibility, support, and accuracy,” Adams wrote.
There is growing demand for mental health care in the U.S., but many people fail to find care because they can't afford to pay for services out-of-pocket.
Adams faced these barriers five years ago after he moved to New York City and tried to find a therapist, he told Fierce Healthcare in 2020.
"I couldn’t find a therapist that I could afford because 70% of therapists don’t accept insurance," Adams said in a previous interview. "The reality is that therapists would accept insurance if it weren’t so hard."
Adams co-founded New York City-based Headway to address accessibility and affordability issues for mental health care services.
An estimated 26% of Americans ages 18 and older—about 1 in 4 adults—suffer from a diagnosable mental disorder in a given year, according to Johns Hopkins Medicine. The main barrier to affordable care is that the majority of therapists do not accept insurance because of the administrative burden and the time commitment required, especially for the 85% of therapists who are solo practitioners.
Health insurance was built for huge hospital systems that employ whole departments to deal with the administrative burdens of insurance, and most therapists are individual practitioners who don’t have the administrative bandwidth to support taking insurance, Adams told Fierce Healthcare.
Headway aims to build a new mental health care system in the U.S. to make it both easier for patients to find a therapist and easier for therapists to accept insurance. The company developed a full-stack therapy marketplace that deals with the messiness of insurance, building out a first-of-its-kind behavioral health network of therapists who accept insurance.
The company's platform lets its users find therapists who match their preferences and book directly on the site and provides transparency about what they'll owe with their in-network insurance plan.
Headway now has 26,000 mental health care providers who deliver care through its platform and actively participate in-network with 19 insurance plans, what Adams calls the “largest network of therapists and psychiatrists in the country who actively accept insurance.”
The startup has attracted big-name venture capital firms but its also backed by new strategic investors led by Health Care Service Corporation.
Health systems face rising demand for behavioral health care services, and there can be long waits to make appointments for outpatient care.
Headway is now a part of HCSC's network in Texas and Illinois, and the company's large and diverse group of behavioral health providers has helped the organization address patients' mental health needs in those communities, Monica Berner, M.D., HCSC's chief medical officer, told Fierce Healthcare.
"Most of their providers in Texas and Illinois are new to HCSC, and adding those providers to our network combined with leveraging their navigation and scheduling platforms has made a significant impact for our members. They currently see over 44,000 visits per month for our Texas and Illinois membership," Berner said. "In Texas, we saw a 5% reduction in inpatient acute behavioral health admissions, despite increases in other higher levels of care for behavioral health. We believe the major reason for that decrease is easier access to care for outpatient behavioral health services."
The ability to easily find and schedule an appointment, face to face or virtually, is critically important in improving outcomes in behavioral health treatment, she noted.
"HCSC values timely access to appropriate clinical care for our members. Headway’s solution allows our membership to find a provider based on attributes that are important to the member, and to do so in a timely fashion," Berner noted.
Headway also supports and encourages the use of measurement-based care, which in and of itself improves outcomes in the treatment of behavioral health conditions, she added.
"HCSC thinks that the model that Headway uses will significantly improve our members ability to access high quality measurement-based services to address their behavioral health concerns. We think that they are a good partner, and a key component to improving how people in the United States access behavioral health services," she said.
HCSC's investment in Headway marks the organization's move to partner more strategically with the startup.
"It was obvious early on from our meetings with Headway, that they had put a lot of thought into how to make it easier for behavioral health providers to accept commercial insurance. We were also impressed with the amount of thought and design that Headway put into their navigation and scheduling platform," Berner said. "The leadership at HCSC and Headway, are both committed to improving access to behavioral health treatment. Headway has been a good partner and responded quickly to implement suggestions and resolve problems."
Last year, Blue Cross and Blue Shield of North Carolina tapped the startup to help expand its network of behavioral health providers. Through their partnership, Blue Cross NC is particularly focused on addressing access issues in underserved communities, including rural and socially vulnerable areas, and expanding mental health care for children, adolescents and individuals across diverse racial and ethnic backgrounds, the organization said.
The company also expanded into California last year, its 48th state, as providers and patients there struggle with a mental health care crisis.
In California, 62% of adults with a mental illness go untreated, according to Mental Health America. A landmark mental health law recently went into effect that guarantees Californians the right to timely mental health and substance use disorder therapy sessions.