Issue 0001
Welcome to Issue 001 of a new every-other-Wednesday newsletter focused on the rise of in-network virtual clinics. (This will alternate with the existing E&O Wednesdays, so back with a new employer’s digital health benefits stack teardown next week.) This every-other-Wednesday issue digs into digital health companies that operate virtual-first medical practices with go-to-markets that include DTC as well as an in-network provider with insurance companies. (As this is a trial balloon issue, please let me know which companies in this category I should have an eye on as well as how this newsletter might be more useful to you.)
E&O Wednesdays: Virtual Clinics
This issue’s deep dive into Cerebral went a little longer than intended, so I’ll save a round-up of bite-sized virtual clinic news and scoops for Issue 002. But wait… was this forwarded to you? You, too, can win friends and influence people via newsletter forwards by clicking right here. Become the newsletter-forwarder we both know you were meant to be. Act fast! This offer won’t last forever (I am not immortal).
Virtual Clinic Case Study: Cerebral
Cerebral, which got its start in January 2020, is a fast-growing virtual clinic company that aims to be a one-stop-shop for mental health care. While the company launched as a direct-to-consumer, self-pay online clinic, it has since inked deals with health insurance companies to become an in-network provider for some plans in some states. Despite its brief existence, Cerebral is already a worthwhile case study for at least three reasons:
- In two years it has gone from treating 100 patients in California and Ohio to 350,000 in all 50 states and the UK. (For reference, Omada Health, a company with a very different go-to-market, took almost nine years to hit that 350,000 number.)
- It has raised nearly half a billion dollars to continue to fuel its growth, including $300 million in a recent round led by Softbank.
- Puzzlingly: It is creating go-to-markets that will take it beyond DTC and in-network provider status with health plans. Cerebral is also set to court employers, pharma, providers and international markets as it tests the limits of hypergrowth in digital health.
Cerebral’s growth to date
If you missed it, scroll up for a chart that shows the number of people that Cerebral says it has treated since it got its official start in January 2020. The company has used various phrases to share its big user number, including “individuals treated” and “lives changed” so there could be some squishiness there.
Cerebral’s original pilot in 2019 treated 100 people. The company ended 2020 with “tens of thousands” of patients treated. It wasn’t until May 2021 that the company announced its first hard number: 100,000. A month later that number jumped to 120,000. I’ve also seen the company share that around 200,000 individuals had been treated by Cerebral by September 2021. (More on the 200,000 figure in the pharma section below.) Finally, Cerebral CEO Kyle Robertson announced in a LinkedIn post in early January 2022 that the company had helped 350,000 patients.
Another important growth metric that needs to keep up with its patient load is the size of Cerebral’s clinical team. The company has recently shared that it has about 2,500 clinicians on staff. All of them appear to be featured on Cerebral’s website. By my count here’s how the clinical team breaks down:
- Prescribers: 1,050 (43 percent)
- Therapists: 870 (36 percent)
- Counselors: 520 (21 percent)
Considering Cerebral was able to grow this quickly in two years, I’m reminded of what Noom co-founder Artem Petakov said while Noom was in its hyper-growth phase:
“We’re also careful. We have decided not to more than double the company in a year just because we have found that companies go astray when they grow too quickly. We are very careful about our culture and making sure we have enough time to evolve it as we scale. That’s been a critical part of the equation. A lot of times you have that loss of excellence as you scale and you never get it back.”
DTC for product-market-fit
Cerebral started out with a direct-to-consumer, self-pay virtual clinic that treated things like anxiety and ADHD. The company stressed that it didn’t just prescribe medications for patients, but it also enrolled them into a care program where counselors could check on them after the initial visit and proactively get in touch if need be. Cerebral sent patients surveys that included standard screening tools like GAD-7 for anxiety, PHQ scale for depression, and ADHD-SRS for ADHD to keep tabs on how they’re doing and if their meds were helping.
Like many tech companies, Cerebral saw DTC as a way to ensure product-market fit before moving into B2B opportunities. While Cerebral hasn’t publicly shared any specifics about the amount of money it has spent on marketing, a recent job posting stated the obvious: Cerebral spends “millions in marketing spend” across its various channels. (That much was clear when Cerebral’s first national TV ads began running about 11 months ago.)
However, the company’s biggest marketing coup was naming Simone Biles its Chief Impact Officer in the fall of 2021. A company executive said on a recent podcast interview that about 20 other mental health companies courted Biles after her withdrawal from the Olympics because of mental health, and she picked Cerebral. The combination of Cerebral’s $120 million Series B in mid-2021 (assuming much of that went into marketing) and its announcement about Simone Biles shortly after likely had a lot to do with the company’s accelerated growth in the latter half of 2021.
While DTC is arguably Cerebral’s core, the company is in the process of hiring a new general manager to run its self-pay care counseling service lines:
“This role will have P&L ownership over the Self-Pay Care Counseling service lines and will be responsible for top-line growth, margin profile, retention and other key business metrics. This role aligns incentives between growth, clinical operations and product with the goal of enabling success for the overall organization. The GM will handle all aspects of D2C revenue driven through the combination of Medication & Care Counseling and Counseling Only plans… This role reports to the CEO.”
Going in-network with all plans in all states
After its first year of operations, Cerebral began working with health plans to go in-network as a mental health provider. By the end of 2021, the company had inked deals with Cigna, Aetna, various Blues, and Medicare Advantage plans and could claim 80 million covered lives. As it began inking deals with insurers, Cerebral began stressing the “quality” of its providers and care programs. That’s one reason, the company told me, it has its clinical team entirely in-house.
Today, Cerebral is in-network with at least one health plan in 29 states. The company has said that it aims to be in-network with all plans in all states. So, quite a bit of work on that front. A recent job posting for a director of payer contracting revealed a bit of Cerebral’s immediate health plan strategy along with its ongoing concerns:
“The Director of Payer Contracting will be directly responsible for initiating and progressing contracting conversations with national and regional health plans. The Director will focus on signing contracts with high-priority payers, with an eye toward improving patient access and increasing reimbursement. It will be important to rapidly scale national in-network coverage for Cerebral clients, while ensuring contracting terms and rates align with the Company’s financial and legal objectives. The Director will also be tasked with renegotiating current payer contracts to maximize reimbursement and financial performance across Cerebral’s service lines. Finally, this person will work closely with the Credentialing team to secure delegated agreements with high-volume payers.”
Employers: Cerebral’s VCs spread its services to portfolio companies
Despite the fact that Cerebral has just begun to flex its DTC marketing muscles and is only beginning to get itself in-network in health plans, the company is already beginning to venture forth into new paths to market. At the end of 2021, fellow digital health company Olive announced that it would offer Cerebral to its employees as an employee benefit. Olive and Cerebral share at least one investor: Oak HC/FT. (The company hasn’t announced any other employer customers yet, but I’ll try to dig some up for next week.)
Cerebral aims to be the go-to pharma partner for DCTs
The week before the Olive deal, however, Cerebral had announced one that was more unexpected: A partnership with pharma company Alto Neuroscience to help it recruit participants in an upcoming decentralized clinical trial:
“Through the collaboration, Cerebral is able to offer its network of members the opportunity to participate in at-home clinical research utilizing Alto’s biomarker platform and targeted drug candidates. The study aims to serve Cerebral members who have been unresponsive to existing therapies in major depressive disorder by providing access to Alto’s precision approach that considers an individual’s unique biology in treatment.”
Cerebral knows which of its past patients were unresponsive to existing therapies because it asks them to fill out surveys weekly or monthly, and those surveys include the standard screening tools mentioned above. Alto was also impressed that Cerebral had a database of 200,000 patients with these responses logged. It’s interesting to note that Cerebral said it had treated a total of 350,000 patients by the beginning of January 2022, but it only had 200,000 patients in its database in mid-December 2021. One explanation: Cerebral has said in past interviews that about 80 percent of its patients fill out its surveys. (The math there more or less checks out.)
Another Cerebral job ad makes clear that this deal with Alto is not an experimental side project. The company believes this is a big business for it:
“The Commercial Team is responsible for driving the success of B2B at Cerebral. We are accountable to deliver revenue-generating partnerships with enterprise customers, with the pharmaceutical vertical being one of our fastest-growing. The Director, B2B, will be directly responsible for identifying, initiating, progressing, signing, and scaling commercial partnerships with pharmaceutical companies. The Director will focus on signing commercial partnerships with high-priority pharmaceutical partners, with an eye toward making Cerebral the go-to decentralized clinical trial partner for neuroscience.”
Don’t forget providers
Finally, Cerebral sees a significant role for providers in its growing stack of go-to-market strategies. Apart from a small deal with another virtual care provider, RelyMD, Cerebral has not announced any relationships in this category yet. But Jeffrey Soffen, SVP of Commercial & B2B at Cerebral told me in a recent interview that providers are an important partner for Cerebral too. Without naming names he mentioned that providers can refer patients to Cerebral. (I assume this all starts with having an in-network provider status with the patient’s health plan.)
Too much, too soon?
I asked Soffen directly whether Cerebral, which is still such a young company, was taking on too much too soon. Most digital health companies take many years to figure out a single go-to-market, but Cerebral seems to add a new one every few months. Soffen:
“One of the things to keep in mind is that what we’re offering is the same across all of those channels. We are delivering high-quality care. So whether you think about health plans, employers, or health systems — our job is to help people get the best mental healthcare possible. And that service doesn’t change. Now, the mechanisms by which we receive those patients might change, but at the end of the day, we’re delivering care, counseling, therapy or medication management… in the same way we would across all those channels.”
I’m curious to see how Cerebral continues to build its team to support its ambitions.
Cerebral’s other expansion plans: New conditions and geographies
While Cerebral has explored various go-to-market strategies, it has also expanded its offerings into new conditions and geographies. A few examples of condition expansion: Cerebral has already moved into nutrition and weight loss. It has also added care services for people with bipolar disorder. Cerebral wants to expand into substance use disorder and schizophrenia soon, while also expanding into wellness with more meditation offerings. The company has also said it hopes to move into pediatric mental health care in the US.
Another job ad helped shed some light on how Cerebral evaluates new product opportunities:
“Lead a team of product managers focusing on expanding Cerebral’s patient and provider product offerings: incl. new conditions, wellness, self-guided care… [and] deliver a progressive portfolio of products with proven year over year growth of at least 50 [percent] topline without sacrificing bottom-line financial metrics.”
Cerebral recently launched in the UK thanks to a deal with a local NHS, which it hopes to build on throughout the country. The company has also said it has global ambitions beyond the US and the UK, which include Europe, Asia, and South America. Cerebral CEO Kyle Robertson called this international expansion a “big priority” for the company recently.
Cerebral’s Tech stack: Homegrown EMR, Doxy[dot]me, Truepill, Change HC, DoseSpot, pVerify, and Gentem
Here’s a look at some of Cerebral’s back-end tech stack:
- EMR: Soffen told me that Cerebral has built its own homegrown electronic medical record “that [Cerebral] built from the ground up.” This surprised me and I took that to mean it’s not a headless Elation EHR build, but I wonder how this homegrown software will work as Cerebral adds more provider partners.
- Doxy[dot]me: The telemedicine platform that Cerebral uses to conduct its virtual visits.
- Truepill for online pharmacy and fulfillment.
- pVerify for insurance eligibility.
- DoseSpot for e-prescribing.
- Change Healthcare for analytics.
- Gentem for medical billing.
That wraps up this first virtual clinic case study. What did you find interesting? What should I have left out? Which virtual clinic company should I dig into next time? Let me know what you think by hitting reply…
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