Digital Substance Abuse Treatment Startups Captivate Investors, Payers

In America today, the need for more substance use disorder (SUD) interventions is clear.

In 2017, more than 70,000 people died from drug overdoses, and the alcohol-related death rate was twice what it was 20 years earlier. Those statistics don’t include nearly 20 million others who did not die but still battled SUD that year.

Patients often push SUD treatment to the back burner due to stigma, inconvenience and difficulty finding care. But a growing number of startups are rolling out digital solutions and apps to help address those issues, gaining popularity from patients, payers and investors in the process.


In 2018 alone, health care startups focused on neurological conditions — including SUD — raised more that $193 million in venture capital through 14 funding rounds, according to VentureSource data first cited by the Wall Street Journal.

Portland, Oregon-based Boulder Care is one such fundraiser. The digital startup recently brought in $10.5 million in Series A funding to help expand its remote opioid use disorder (OUD) treatment services. Those include counseling, drug testing and medication-assisted treatment (MAT), all administered remotely using technology within the privacy of one’s own home.

But even startups with relatively low funding totals are making waves in the addiction treatment industry. Take San Francisco-based Ria Health, for example, which has raised about $250,000 in seed funding to date, according to the fundraising tracker Crunchbase.

The company — which specializes in remotely treating alcohol misuse, especially among women — recently scored a partnership with Anthem (NYSE: ANTM), which is covering Ria’s telehealth program.

“There [are] plenty of people attacking substance use disorder with innovation,” CEO Tom Nix told Behavioral Health Business. “What we’ve seen is people focus mostly on opioids. Our differentiator is that we focus exclusively on alcohol use disorder.”

Patients are generally connected with Ria though their health plans or online searches. The program, which is managed by a physician, combines technology, medication and coaching to help people stop drinking. It runs through a smartphone app, which allows for video monitoring and Bluetooth-linked breathalyzer tracking.

“Large payers are desperately seeking out these types of alternatives for treatment for alcohol use disorder, so we’ve become a go to provider in that area,” Nix said.

Research suggests why: One study showed that after six months in the program, Ria patients decreased alcohol consumption by 66% and increased their average number of weekly sober days from 1.8 to 4.2.

Currently, Ria operates in more than a dozen states and is in “various stages of finalizing agreements” with the “top five payers” across the country, Nix said. Ria also works with integrated health systems to augment their SUD offerings and has had “some dialogue with a few pure-play behavioral health, brick-and-mortar programs.”

“There’s a mission that we’re on, which is to bring affordable, effective evidence-based treatment to the more than 20 million Americans struggling with alcohol misuse,” Nix said. “In order to accomplish that mission, we’re going to have to partner with a variety of different types of entities, so that would make sense for us — to be open to discussions around partnering with [behavioral health providers].”

Meanwhile, Boston-based DynamiCare Health, another startup offering remote SUD treatment, is already partnering with behavioral health providers to help patients kick addiction.

“We partner with addiction treatment programs, large health systems, accountable care organizations (ACOs) and health plans,” CEO Eric Gastfriend told BHB. “We have partnerships with 12 addiction treatment systems across the country right now, and sometimes the addiction treatment programs purchase certain features of the app or our program to use with their population.”

Some examples include Falmouth, Massachusetts-based Gosnold and Cincinnati-based Brightview Health.

Along with telehealth, DynamiCare uses financial incentives, or “contingency management,” to help patients recover from drug, opioid, alcohol or tobacco addiction.

“Addiction is a disease of the motivational system,” CEO Eric Gastfriend told BHB. “The motivational incentives are a tool that acts like a counterbalancing force between the immediate drive of the addiction and the immediate rewards of financial incentives.”

DynamiCare connects patients via app with recovery coaches, who check in over call or video on a weekly basis. Patients also take remote substance tests, which can be monitored using selfie video. Additionally, the tool has guided therapy modules and a GPS feature to monitor if patients go to appointments.

When patients achieve certain accomplishments — such as passing drug tests or attending appointments — they receive money on a special debit card, which will not work at bars or liquor stores.

“There’s actually a large body of scientific evidence around using motivational incentives and addiction treatment called contingency management,” Gastfriend told BHB. “There are over 100 randomized controlled trials on it, but it rarely gets used in practice.”

The company touts research that shows the program increases retention for patients in alcohol use disorder treatment by 53%.

So far, DynamiCare operates in 12 states and has raised $5.1 million in financing and awards, according to Crunchbase.

The company is also working with a couple health plans and employers who are starting to cover DynamiCare’s services.

The employee benefit market is one Lionrock Recovery has also leaned into. The Petaluma, California-based company provides a variety of individual and group counseling services for SUD, all online.

In late January, the company — headed by founder and CEO Peter Loeb — announced a new standalone benefit for patients. Under the option, patients who have workplace insurance in-network with Lionrock will be able to have their SUD treatments covered by their employee plans.

Currently, Lionrock accepts insurance from various Blue Cross Blue Shield plans, as well as from Aetna and Cigna (NYSE:CI).

Loeb founded Lionrock in 2010 after his sister died following a longtime struggle with OUD. He says the goal of the new benefit is to help employers close the gap between the SUD services they are required to cover by law and the services they are typically covering.

The option is ideal for working individuals with families and busy schedules, Loeb told BHB, noting that the demands of their daily schedules might otherwise leave them with little time to seek help.

“This is a way for employers to provide a benefit that clients will actually use,” Loeb told BHB. “Half of our clients tell us that if there were no online treatment option, they wouldn’t get help.”

Additional reporting by Kyle Coward

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