2 min read

Startup Opportunities in Mental Healthcare

If you’re looking for a business model that addresses a huge and growing market – and can also save lives – read this article from the folks at a16z:

How Software Can Heal The Mental Health System

To expound a bit on one problem mentioned in this article…

After years of suffering and denial, many folks come to accept that they might have a mental illness and decide its time to see a professional. But, when they try to set up that first appointment they find it requires multiple (unreturned) phone calls and choosing a stranger to spill your deepest secrets to by picking a random name from the online yellow ages. As the article above says, “One recent study of 360 psychiatrists resulted in only a 26% appointment rate, and getting that first appointment took an average of 25 days.”

In retrospect, the success of Uber seems obvious considering that the previous market making mechanism for that particular industry was to stand on the corner, hold your hand up, and hope that someone selling the service you want drives by. In mental healthcare, we’ve got a similar problem where buyers desperate for services drop out of the marketplace due to the frustration of finding a seller.

And demand for those services is booming.

The Affordable Care Act introduced mental health parity, meaning that insurance must treat mental healthcare the same as all other forms. So, if they’d pay for unlimited visits to your cardiologist, they’ve got to also pay for unlimited visits to your psych. Also thanks to the ACA, millions of folks now have the ability to pay for mental health services who didn’t have it before.

On top of that, mental illness is being de-stigmatized. It may not feel that way when you’re struggling to be understood by un-empathetic friends and family. But every year we see more mainstream articles on mental health, more celebrities talking about their struggles and, in our neck of the woods, more talks at developer conferences, and more articles getting upvoted to the front page of Reddit and Hacker News (it’s where I found this one).

A serial entrepreneur friend once said, “I look for tectonic shifts in the marketplace that create temporary windows of opportunity. We will never see a shift as drastic as what the ACA has caused, and there is no marketplace larger than healthcare.”

Of course, we don’t know what’s going to happen with the ACA over the next few years. But millions of new buyers are entering the marketplace, desperately wanting to give their (insurance’s) money to someone who can solve their problem. And they’re running up against inefficient and antiquated mechanisms for market making and service delivery – mechanisms that we’ve seen solved by software over and over again in other industries.

And unlike hailing cabs, solving this problem saves lives.