Ginger CEO Looks for Company’s Health Plan Business to Double — If Not Triple — by 2022

The coronavirus has wreaked havoc on many behavioral health providers’ business models — but not Ginger’s. In fact, the COVID-19 emergency has helped validate the San Francisco-based health and wellness startup’s strategy and accelerate its goals.

Ginger is a virtual behavioral health care system that partners with employers, health plans and strategic partners to deliver coaching, therapy and psychiatry to members via text and video.

Today, the vast majority of its partnerships are with large employers such as Delta Air Lines, Domino’s and Sephora, but in the future that could change. Relationships with health plans and other strategic partners are expected to bloom like never before, thanks in large part to recent events.

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Earlier this month, Ginger announced that it had raised $50 million in Series D funding, with contributions coming from industry giants such as Cigna Ventures and Kaiser Permanente Ventures, among others.

That money, which brings the company’s total funding raised up to $120 million, is a direct result of the pandemic, according to Ginger CEO Russell Glass.

The COVID-19 emergency has pushed both telehealth and mental health onto the national stage, leading to higher engagement from Ginger users and more interest from newfound potential partners.

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Behavioral Health Business recently connected with Glass to discuss what all that means for Ginger. He told BHB how high unemployment is impacting the company’s business, why he’s so bullish on health plan partnerships and where he stands with federal payers.

You can find all that and more in the conversation below, edited for clarity and length.

Inside the C-Suite shines a spotlight on executives in the behavioral health space. Know a top leader who’d like to be profiled in an upcoming Q&A? Drop us a line at editor@bhbusiness.com.

BHB: Congrats on the new funding. I know you plan to use this money for growth, but can you provide any specific goals you have in mind?

Glass: There are three core areas that we’re going to be focused on: research and development, strategic partnerships and expanding the core work we’re doing with employers.

Ginger’s entire reason for being is to help fix the supply and demand imbalance in the mental health care space. Far more people have a need for care than can get access to it.

This isn’t going to get solved with the same old network-based approaches. It’s not going to get solved with more providers. You really have to innovate and use technology and new approaches to deliver high quality care at far more scale than we can today.

R&D is an important part of that. Then also, … we’re continuing to leverage technology to help us scale and to enhance the experience for members as we scale.

On the strategic partnership front, Cigna invested in this round. They’re an example of health plans that we’re increasingly spending time with in order to provide our services beyond just to employers. You’ll see us announce some partnerships in the coming quarters that are significant and highly strategic to help us continue to expand our ability to reach more and more people more quickly and more effectively.

Finally, the vast majority of our business today is with large employers. We want to make sure we can continue to focus on this area and … help people at the small and medium businesses, in addition to the large jumbos that we work with.

On the R&D front, what kind of technologies are you working on? It sounds like you’d consider using computerized prompts that don’t require clinicians.

We are certainly continuing to innovate in the world of machine learning and artificial intelligence.

Most of the focus today is on decision support in helping to make our providers more effective.

An example of that is how we predict the best pathways and the best, most personalized set of interventions, then give that prediction to our clinicians and coaches. They can make good decisions about their care paradigms.

We’re going to continue to innovate there. We’re going to continue to innovate on being able to help those members with additional content exercise activity cards, as we call them, so that we can move them as appropriate into self-care, in addition to the [other services] we provide.

We plan to continue to be focused on M&A and inorganic growth strategies, in addition to our internal strategies. We’ve acquired the technology assets of a few different companies over the last couple years, and we will continue to be aggressive there as well.

How big of a role did the COVID-19 emergency play in helping raise this money?

We didn’t expect to raise money this year.

What we saw here was a significant acceleration of demand, a situation where it was clear that we could provide support for far more people. The need was only going to increase over time.

We decided that it made sense to look at raising money because if we could do it, it would just help us accelerate during this period, support more people and be in a great position to come out of it in even even better shape.

We decided to only talk to a handful of firms that we knew well and we felt great about. It turned out to be a very fast process. We’re fortunate to have a lot of oversubscription and multiple term sheets that we had to turn down. But we ended up with a great group.

How else has the coronavirus impacted your business, for the better or worse?

On the positive side, there’s certainly been an acceleration of adoption of telehealth and comfort in using these kinds of solutions.

There are also some lifestyle changes on the positive side that are compelling — not having to travel as much, not having to sit in commutes to get to the office as often, spending more time with family. These are very positive things that I hope are somewhat sticky.

Obviously, there have been a number of negative things as well. It has been hard on mental health. We see increased stressors from financial pressures, concerns and anxieties about getting the illness itself or family members getting their illness, to competing priorities with kids not being able to go back to school to just social isolation and the effects that it has.

Touching on some of those negatives, how, if at all, does high unemployment affect you guys in your work with employers?

Ginger sells directly to employers. We’re providing an end-to-end mental health service from coaching to therapy to psychiatry based on the level of need. We’re available 24/7.

We provide a level of support that helps fill the gaps that current health plans and EAPs can’t fill because they don’t have they don’t provide enough access to those resources.

We’ve seen a mix of responses from the unemployment standpoint.

On one side, Ginger gets paid based on the number of employees that an employer has. As the census file shrinks in a workforce, the number of employees that have access is shrinking.

However, many employers have recognized that access to mental health support is critical and have allowed employees they’ve laid off to maintain their benefits — so we actually haven’t seen as much of a detrimental effect as you might predict.

And on the converse side, we’ve seen acceleration in terms of the number of employers who have recognized, ‘I have to get a solution in place because mental health is such an important part of business continuity in this period.’

For the most part, it’s probably pretty well balanced. The combination of the significant increase in demand for the service will ultimately lead to upside for us during this period.

Let’s dig into that increase in demand a little bit. In July, you saw a 125% spike for coaching and a 265% spike for therapy and psychiatry compared to pre-COVID-19 averages. Are those numbers in line with the steady growth you’ve been seeing year-over-year or are they crazy high regardless?

In the six month period preceding the pandemic — between August 2019 and January 2020 — we saw an 88% increase in active coaching users and a 66% increase in clinical sessions.

So you do see a pretty significant growth rate even before the pandemic.

But then if you look at the year-to-year comparison — July 2020 versus July 2019 — we saw a 180% increase in coaching and a 364% increase in clinical sessions.

How are you dealing with that increased demand?

One of the benefits of being a company focused on supply-and-demand imbalance in our model is that we’re designed to scale as needed.

We haven’t actually had to go out and aggressively bring on new providers outside of what we had planned on doing anyway. We’ve [hired coaches according] to plan and accelerated some of our clinical hiring in bringing additional therapists and psychiatrists on board.

That’s mostly because we’ve seen an increase not only in demand, but in severity of need. We’ve seen more people come in with a need for that higher level of care than we saw pre-pandemic.

What long-term impact do you think the coronavirus is going to have for you guys?

We always believed that this is where the world was going. What the coronavirus has done is accelerate the adoption curve.

I think the business model stays the same. We are accelerating certain investments, and one of the reasons we raised money was to be able to do that, due to the fact that we’ve seen so much acceleration in adoption.

I expect coming out of the pandemic you’ll see some leveling off. You’ll see some people who prefer to go back to in person. But if you look at other areas where people have moved to telehealth, it’s a very sticky transition.

So what are your goals short-term and long-term?

Short term, it’s those three areas I mentioned: R&D, strategic partner expansion and continuing to execute against our marketing and sales efforts.

We’re spending a lot of time with health plans right now, and we see continued focus on expansion within those health plans to make Ginger far more available and affordable for our members that have access through the different health plans.

I would say 10% of the business today is health plan-driven business. As we scale, though, we expect that to be a larger component of our business. It wouldn’t surprise me if that at least doubles, if not triples, over the coming 12 to 18 months.

Then long-term, our vision is a world where mental health is never an obstacle. We believe we can provide super high-quality mental health care at very low cost and at scale. That continues to be the long-term focus.

Would that ever include working with Medicare and Medicaid? Is that a dream you have?

Oh, 1,000%. Ultimately, we can’t accomplish that vision unless we can support people who have public health care and government-funded health care. So that’s a critical part of accomplishing our long-term vision.

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