Headway raises $26M to help people find therapists, and therapists to accept insurance

Mental health has taken a nosedive for many people this year - spurred by economic and political uncertainty, a Covid-19-fueled public health crisis, and being cooped up, among other things. In the U.S., a startup is today announcing some funding to make it easier for those who need it to find help.

Headway, which helps people search for and engage therapists who accept insurance for payments, is today announcing that it has raised $26 million, a Series A that it plans to use to expand the service to more cities and to widen the pool of therapists that it works with, as well as to invest in building out more technology to improve how its search and recommendation works.

The startup currently has some 1,800 therapists on its books in the New York area and says that tens of thousands of patients have used its service to find them and book appointments.

The funding is being co-led by Thrive and GV (formerly known as Google Ventures), and also includes participation from past investors Accel (which led its seed round), GFC and IA Ventures. The startup has now raised $33 million, and other previous investors include the founders of One Medical, Flatiron Health, and Clover Health. It's not disclosing valuation with this round.

Headway has built a two-sided marketplace of sorts that taps into one of the biggest hurdles around how medical care works in the US: it favors big business over smaller operations.

People who are seeking out a therapist usually are looking for someone who they can trust and connect with to constructively and reassuringly work through problems they are facing. That can be a big challenge in itself - and Headway addresses that with a kind of Yelp" style directory covering them. To note, the Yelp comparison only goes so far: there is no paid placement, just listings. That could be one reason why it caught the eye of a VC connected to the world's biggest online search company.

But this isn't the only issue patients face.

In many cases, therapists are sole traders, people who work for themselves, and they typically do not take insurance as payment.

The reason may have been originally partly traditional. Specifically, mental health therapy would not have been covered by insurance in the old days, and employees would not want to disclose issues to employers, who typically provide health insurance in the US, to push that paradigm. (This is rapidly changing, and in some industries it's been turned into a deal sweetener, with extensive policies covering many other kind of therapies also included).

But the reason for lack of insurance coverage is also operational: the health insurance industry is geared around working with large hospitals and health organizations that have large teams of people on staff specifically to handle claims, process payments, and generally interface with the different parties.

Andrew Adams, the co-founder and CEO of Headway, said he came up against this very issue himself when moving to New York from California several years ago to take a job. He was looking for a therapist, but he found most unwilling to accept his insurance as payment, making getting therapy unaffordable.

This is the defining problem in the space," he in an interview. Health insurance is built around a medical world dominated by billers and admins, but therapists are small practitioners and don't have the bandwidth to handle that, so they don't. So we thought if we could make it easier for them to, they would, and they have."

Headway's approach has been to build relationships with insurers and act as a kind of middleman/broker between them and a wide pool of therapists. It's built software that helps those therapists - whose skills and expertise are in working with people and helping them manage their issues, not office and business admin - manage not just appointment booking but, critically, billing and all of the work that comes with that.

The business model is interesting here. Headway doesn't charge patients for its search service, nor does it charge therapists. It takes a commission from the insurance providers, which pay it essentially for enabling wider access to more therapists (and billable work) for their policies.

Today, Headway's focus is squarely on mental health, with therapists" mostly being in categories like psychotherapy or psychiatry. But you could imagine how that might over time widen out to the multitude of other professional categories that also reach into complementary or completely different categories of therapies and are connected to a person's well-being and mental health.

So, too, are there more opportunities for what Headway provides in the process.

Adams said that before the coronavirus pandemic, some 90% of meetings between patients and therapists were in-person. Now, 90% are virtual."

While Headway is not providing the platform for those meetings to take place, it seems like an obvious step to provide therapists with the tools to do their customer-facing work alongside the tools it's already providing to handle those relationships in the back office.

Similarly, while the search engine today can help people look for therapists based on some parameters like location, gender and age, you can imagine more being brought into that recommendation mix, where a person without a clear idea of what he or she wants can perhaps walk through a more detailed list to identify what to look for next.

Interestingly, Headway's role may be no less important in environments where there may be multiple systems at work, for example in countries where the government provides some healthcare coverage, or all of it, or none at all.

The complexity of dealing with insurance doesn't get any harder or easier," Adams said. In fact, I'd say there is even more needed to deal with the complexity."