Lifestance Health Group Inc. CEO and Founder Michael Lester doesn’t see the many digital mental health providers that have flooded into the market as competitors for patients or for staff.
That’s because Lifestance (NASDAQ: LFST) does what many in the ever-growing crowd of venture capital-backed digital mental health companies don’t.
“We don’t see the pure-play telemedicine companies as significant competitors,” Lester said, speaking at a session of the 2022 J.P. Morgan Healthcare Conference. “We’re providing care to a little bit higher acuity level of patient; we’re not just taking care of the worried well. ”
So many of the new digital mental health companies focus on the “worried well,” as Lester described. These are people that need help working through emotions or coaching through life struggles but are more or less medically sound. As such, many new digital mental health companies are focused on providing help to people that doesn’t center around providing recognizable health care.
“All of our patients have a diagnosis. We bill a CPT code to the third-party payer for every service that we provide,” Lester said. “We’re not seeing any new entrants with a hybrid model gain any significant traction today.”
And if it does compete with another company, the Scottsdale, Arizona-based outpatient mental health does so with the massive scale of 4,400 clinicians that are in-network with over 250 regional and national payers.
On the staffing front, Chief Growth Officer Danish Qureshi said the company doesn’t see any changes in the competition for behavioral health clinicians today than it has in the company’s short history. Lifestance was founded in 2017.
“There’s always a subset of the clinical population that is looking for part-time independent contractor work,” Qureshi, who also spoke at the J.P. Morgan session, said. “We’re really focusing on the clinicians that are looking to build a career on a fully employed basis over a long-term period… Generally, we’re appealing to different subsets of the clinician population.
“And I would argue that we’re appealing to the larger group of the two.”
Digital mental health companies raised over $5.1 billion in 2021 often gain major attention through lofty valuations and funding rounds act as coordinators and facilitators of care, like Quartet Health, or focus heavily on non-clinical wellness and self-help like Headspace Health.
On top of actually providing care, Lifestance further bucks the industry trend of accepting insurance for therapy and other mental health services. Lester said 90% of Lifestance’s patients are treated on an in-network basis.
“With the markets that we’re in, we feel like we really have the in-network coverage buttoned up pretty good,” Lester said. “Payers receive us with open arms because they’re so desperate to have a mental health clinician network to provide to the members.”
Lester and the other Lifestance executives on the conference session didn’t comment on its fourth-quarter performance but did offer minor updates. The company did see an uptick in cancellations in December because of patients and providers getting sick from the omicron variant of the coronavirus.
“Like most companies, we’re not immune to COVID-related challenges,” Lifestance CFO Michael Bruff said. “But our hybrid model allows us to navigate these dynamics better than most.”
Lester said that the company grew its clinician network “significantly” and stabilized Lifestance’s clinician retention, a key concern voiced by the company in the past, to an annualized rate of 80%.
He also said that exit interviews revealed that clinicians weren’t leaving for competing organizations but were leaving the industry altogether through some combination of retirement, pandemic burnout, changes in personal priorities, or constraints related to periodic K-12 school closures.