Key Takeaways
- Innovation has significantly expanded access to mental healthcare, particularly for patients with low- and mid-acuity needs. A new generation of companies is now targeting populations with more complex clinical profiles
- These platforms combine multidisciplinary care teams, evidence-based treatment models, and integrated tech infrastructure to improve long-term outcomes
- Payers are increasingly pursuing value-based partnerships, and many startups are already contracting under case rates, bundled payments, and shared savings models
- We believe the next wave of behavioral health innovation will be defined by platforms that can measurably improve outcomes for the highest need patients at scale
In Why Now? A Look at Recent Trends in Behavioral Health in early 2022, we highlighted the wave of investment aimed at expanding access to, and improving outcomes in, behavioral healthcare. Increasing demand for care stemmed from a rising prevalence in mental illness, caused in part by COVID-era isolation, and less societal stigma.
Three years later, those trends persist, but the conversation is evolving. While a decade of innovation helped expand the availability of care for low- and moderate-acuity patients, many of the most clinically complex cases remain underserved. These are patients with diagnoses such as serious mental illness, substance use disorders, and regular use of acute care services such as emergency departments or hospitalizations. In other words, patients who require care that goes beyond episodic therapy or wellness tools.
We believe the next frontier in behavioral health is serving such populations through scalable, effective, and economically sustainable models. In our view, there is a vast need for care models tailored to individuals that provide long-term, tech-enabled, value-aligned outcomes. Roughly one in five US adults live with a mental illness, and about 5% experience serious mental illness.1 For these groups, existing behavioral health infrastructure often struggles to consistently support meaningful outcomes, due to issues including workforce shortages, fragmented care pathways, and reimbursement complexities.
A New Pillar in Behavioral Health Innovation
We see Behavioral Health 2.0 as a complementary pillar to the first wave of innovation. These companies build on progress in access and engagement by introducing full-stack care models designed for higher-cost populations due to their more complex and severe clinical needs.
These companies often share defining traits, including:
- Multidisciplinary care teams comprising therapists, social workers, psychiatrists, care navigators, dietitians, health coaches, and peer support
- Structured clinical protocols grounded in evidence-based treatment
- Integrated tech platforms supporting triage, engagement, and outcomes measurement
- Risk-aligned contracts with payers, including case rates, bundled payments, and shared savings models
Rather than adapting brick-and-mortar or low-acuity care models to higher-need patients, these platforms are designed to serve complex populations across the full continuum of care. Equip is an example of this evolution. Focused on eating disorders, a condition with some of the highest acuity and lowest access, Equip delivers virtual, family-based treatment through a patient’s dedicated five-person team.
Providing care in all 50 US states, Equip’s model is particularly powerful in geographies where specialized care does not exist. Patients have reported a 50% symptom reduction within five months, and 81% achieve or maintain their target weight within a year.2 Just as importantly, Equip improved caregiver confidence and reduced the disruption to school and work by delivering clinically rigorous care through an accessible and scalable model.3
Other companies are developing similar approaches in adjacent domains. For patients with serious mental illness, Amae Health pairs psychiatry, therapy, and peer support with housing and social services. Ophelia delivers medication-assisted treatment through a virtual-first model that emphasizes rapid access, discreet care, and personalized support. Its model has proven effective in engaging and retaining Medicaid patients4 – a population that is historically difficult to reach – by offering same-day inductions, flexible scheduling, and a dedicated care team including clinicians and care coordinators.
We expect artificial intelligence to play an increasingly central role in improving care team efficiency and supporting patients through clinical tools and personalized interventions
Adams Street’s portfolio company Lyra Health is building on its experience in blended care to serve patients with more severe and complex needs. Lyra recently expanded its partnerships to offer nationwide networks for dialectical behavioral therapy5 and substance use disorder treatment, and is now delivering virtual intensive outpatient programs as part of a broader effort to serve complex patient populations.
Adolescent populations present an especially challenging case and compelling opportunity. InStride Health offers a virtual care model for children and adolescents with moderate to severe anxiety and obsessive compulsive disorder that combines therapy, psychiatry, and exposure coaching to bridge the gap between weekly therapy and inpatient care. Companies such as Bend Health, Cartwheel, and Charlie Health deliver high-touch care models through schools, families, and pediatric care partners, offering virtual and hybrid services that meet teens and parents where they are.
While each of these companies approaches care through a different clinical lens, all combine condition-specific protocols, longitudinal care infrastructure, and outcomes tracking. Each is committed to serving patients for whom the stakes are highest, using models that can scale.
Why Payers Are Paying Attention
The case for investing in high-acuity behavioral healthcare is no longer just clinical – it’s economic. Payers face rising medical spend, emergency room overflow, and member attrition tied to untreated behavioral health needs. As a result, they are increasingly looking to partner with companies that can deliver sustained engagement, improved outcomes, and reductions in total cost of care.
The most advanced platforms are contracting under value-based models including case rates, shared savings, and hybrid capitated arrangements – blended payment structures that combine fixed per-member fees with performance based initiatives.6 Success requires more than clinical efficacy, as payers demand timely access, seamless coordination with primary and specialty care, and real-time data visibility into patient progress. Behavioral Health 2.0 companies are meeting this bar by leveraging infrastructure that allows them to manage clinical complexity while integrating into broader medical ecosystems.
What Comes Next
What we expect next from high-acuity platforms falls into three key areas. First, we anticipate broader coverage across the full spectrum of serious mental illness – including psychosis, treatment-resistant depression, dual diagnosis, and other complex comorbidities – through specialized care models tailored to these populations.
Second, we expect these platforms to deepen their integration into the broader healthcare system by embedding within care navigation platforms, payer care management teams, and primary care workflows to support coordinated, whole-person care.
Lastly, we expect artificial intelligence (AI) and automation to play an increasingly central role, not only in reducing administrative burden and improving care team efficiency, but also in directly supporting patients through AIenabled clinical tools and personalized interventions.
Behavioral health innovation is not slowing down. It is becoming more targeted, more structured, and more aligned with payer needs. At Adams Street, our goal is to continue supporting founders who are building durable, evidence based, and risk-aligned models for the most vulnerable patients. And as we move from access to acuity, we believe the next generation of winners will be those that can manage the complexity of care while demonstrating value at scale.
1. National Institute of Mental Health
2. Equip’s Virtual Eating Disorder Treatment Exhibits Exceptional Patient Outcomes, Breaks Barriers to Care, Company News Release, June 29, 2023
3. Ibid
4. Data Brief, Ophelia
5. Dialectical Behavior Therapy (DBT), Cleveland Clinic
6. Health Affairs Scholar, Oxford Academic
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