Austin, Texas-based startup Legion Health follows a tantalizing track of the development of another high-profile health care startup that turned heads with a big-time funding round.
Also based in Austin, Wheel Health Inc. landed a $150 million Series C investment round to scale up its platform which gives any organization the needed infrastructure to provide virtual primary care.
Cruchbase.com estimates that Wheel — which has so far raised $216 million — could be valued between $500 million and $1 billion, potentially making a unicorn startup.
Yash Patel, co-founder and CEO of Legion Health, said in an interview with Behavioral Health Business that his company similarly provides the clinical infrastructure to “enable innovation to occur … in the digital mental health space.”
Digital health companies saw about $57.2 billion of funding, a 79% year-over-year increase in 2021, according to CB Insights.
By serving burgeoning digital health companies with access to mental health clinicians, Patel hopes Legion Health can capitalize on a huge opportunity and help the behavioral health industry solve the long-running provider shortage that was worse by the impact of the coronavirus pandemic.
“There’s not a shortage of time that they (mental health clinicians) want to provide — so there’s this latent supply that exists in the form of time for these mental health professionals,” Patel said, adding that Legion Health taps into that supply and brings mental health providers and the health care organizations that need them together on its platform.
Legion Health pitches itself as the first b2b marketplace for mental health clinicians. Legion Health establishes a relationship with health organizations as helps facilitate connections between providers and organizations. Clinicians work for Legion as Form 1099 contractors, according to the company’s website.
Patel founded the company in May 2021 with fellow co-founders Daniel Wilson and Arthur MacWaters. They started exploring a potential venture in mental health in November 2020. They met with and interviewed up to 200 health care startup founders, hospital managers, mental health practitioners, and the like to develop the concept for the company.
The Legion Health team was accepted by the Mountain View, California-based startup accelerator Y Combinator in June 2021 where they were able to get coaching for first-time startup founders and raise $125,000 for a 7% stake in the company.
The company facilitates connections with mental health providers of all types including psychiatrists, psychologists, psychiatric nurse practitioners, social workers and counselors, Patel said.
“These companies are all solving the same problem around recruiting, managing and load balancing their clinical workforce,” Patel said. “What they would rather be doing is spending their engineering and clinical operations resources on their patient experience.”
Legion Health receives information on potential clinicians — including background, specialty and licensing — and connects them with clients which include digital health companies, hospitals and value-based care providers.
That clinician then becomes part of the client’s team. Clinicians then determine how much time they want to spend with Legion Health clients.
“We think that that’s really important because we want our mental health professionals to feel like they’re actually part of a real organization with a real team with supervision,” Patel said.
On the backend, Legion Health manages patient scheduling, payment and added clinician support.
Legion Health separates itself from a staffing agency by maintaining relationships with health care organizations by helping them manage variable patient demand. Legion’s clients then pay by the hour for the time clinicians they connect with on the Legion platform. In turn, Legion pays clinicians every week.
Legion has about 800 mental health clinicians in all 50 states on its platform.
The company also has contractual relationships with eight of enterprise customers, some of which are “household players in digital mental health,” Patel said.
“What we found when we talked to many of these mental health providers is that they were having a poor experience working as a contractor for many of our potential customers,” Patel said. “That’s because they oftentimes weren’t getting the volume of patient appointments that they were looking for and so then they would leave those platforms because they’re dissatisfied.
“And so what we’re thinking about is how can we provide a W-2 experience to the clinician that is not looking for a full-time job.”
Legion Health’s appeal to clinicians and to health care organizations
Patel says Legion offers clinicians the flexibility to work when they want, access to remote pay, “high pay,” and the ability to pick who the clinician wants to work with.
Clinicians are also able to work with Legion Health even if they are already employed elsewhere. Legion also helps automate the process of helping providers get licenses in other states to better redistribute the latent supply of mental health provider time.
“What we’re finding is that there’s a sweet spot of around 20 to 30 hours a week where people are looking to make additional income,” Patel said. “And currently, there’s not a really good way to do that.”
The company is presently raising additional capital to fund expansion. Investment in mental health-related companies and startups is at an all-time high. Patel is bullish on the company’s prospects to find investors.
Legion Health announced on Tuesday that it had raised $2 million in seed funding, including the $125,000 from Y Combinator.
Individual investors include Erica Johnson, co-founder of Modern Health; Ravi Shah, chief innovation officer of Columbia Psychiatry; Jeffrey Leerink, CEO of SVB Leerink; Robert Musslewhite, president of Definitive Healthcare; and Jay Desai, former CEO and founder of PatientPing.
Institutional investors include UpHonest Capital and Soma Capital.
Patel is also bullish on the rapid expansion of telehealth, the expansion of primary care providers seeking behavioral health as they move to value-based care and the proliferation of digital mental health providers that are trying to scale up.
“So as the space becomes more crowded, we think it’s great because it seems like every company is providing a different flavor of what the market needs,” Patel said. “But that’s an opportunity for us to really help a lot of companies thrive.”
