Iris Telehealth has raised $40 million in a Series B to fuel a national expansion and deepen its capabilities across its operational, clinical and technology functions.
Andy Flanagan, CEO of the Austin, Texas-based telepsychiatry provider, told Behavioral Health Business the funding round allows the profitable company to accelerate its already rapid growth rate and keep up with run-away demand for telepsychiatry services.
Iris Telehealth raised $3 million at Series A in September 2017. The company was founded in 2013 and company currently operates in 33 states.
“We believe that we can be incredibly efficient in scaling our medical group: We’re responding to growth as opposed to planning growth,” Flanagan said. “And the new technology, of course, is an investment for us to be able to move faster.”
Iris Telehealth will also expand its ability to consult and configure health care providers’ technology systems to better streamline the patient experience and journey with telepsychiatry. This will include better integration directly into providers’ existing electronic health records.
Founded in 2013, Iris Telehealth could have as many as 700 employees by the end of the year. Between 60% and 70% — 420 to 490 — will be clinicians, Flanagan said. The company partners with almost 200 hospitals and community health centers, according to a press release.
Summit, New Jersey-based Concord Health Partners and Seattle-based Columbia Pacific Advisors led the funding round.
Columbia Pacific Advisors’ investment in the Series B round expands its commitment to Iris Telehealth, following its initial investment.
“We have seen Iris grow for many years and believe they are just getting started,” Stan Baty, co-Founder and managing partner of Columbia Pacific Advisors, said in the release.
Iris Telehealth has seen exponential growth over the past 18 months, Flanagan said. The company has been profitable and has sought capital now to push the company’s growth and capabilities to meet the moment. He added that the company hasn’t needed the capital and has been reliant on cashflows for some time, allowing it to grow to this point with a nearly-five year gap in funding rounds.
And Covid-19 has sent demand for telehealth in behavioral health through the roof.
Telehealth and mental health services work dynamically well because they aren’t tied to biomarkers in the same way that physical health care is, allowing for a wider opportunity for telehealth to proliferate in mental health, Flanagan said.
Less than 1% of mental health and substance use disorder outpatient visits were done via telehealth pre-pandemic. That jumped to 40% from March 2020 to August 2020, according to one estimate. Another estimate shows that 58% of all telehealth visits were for mental health in 2021. This suggests that telehealth is the new normal for many in outpatient mental health.
But for hospitals and community health centers, telehealth is often a means of making up for the shortage of mental health providers in the U.S. A 2021 report from the federal government finds that the U.S. needs 4.5 million more behavioral health practitioners to meet current needs.
“We are going to close gaps in care and do it with technology,” Flanagan said.
Iris Telehealth itself has to grapple with the workforce shortage to staff the organization. Citing the company’s Net Promoter Scores — which Flanagan described as “world-class” — the company’s culture makes Iris Telehealth “a long-term match home for high-quality clinicians.”
He also claimed that a lot of clinicians come to Iris Telehealth from “companies that are covered in the press with super high valuations and a lot of money.” He didn’t specify which companies.
“Our goal here is to be an incredibly large, well-diversified psychiatric behavioral-focused medical group,” Flanagan said. “So as long as you stay close to our true north we’re not going to experience those same challenges” as other health care providers.
By deepening its reach and capabilities, Iris Telehealth will also be able to help health care providers approach integrated care and value-based care models. Iris Telehealth is looking to the lessons learned from population health management in physical health for conditions such as diabetes.
Iris Telehealth is looking at the lessons of the rise of electronic health records, which forced providers onto one of a few systems, to take collaborative and flexible approaches to integrate Iris Telehealth with existing electronic health records systems.
“We’re going to run the full playbook on second base,” Flanagan said.
Flanagan is also bullish on the prospects for telehealth reaching parity with in-person care and the wide adoption of hybrid models of care — where patients receive care in both settings. Iris Health also patients stay connected with partnering health care organizations.
He is also bullish on the possibility of a friendly regulatory environment for telehealth. Many of the flexibilities that have allowed telehealth to proliferate have been because of a loosened federal regulatory framework inspired by the pandemic.
Flanagan declined to talk about the company’s valuation in this round of funding but did say that the company is deceptively large compared to the rest of the market. Iris Telehealth expects to soon close in on its 2 millionth patient encounter.
“If you look at the size of other companies and you look at the size of our company … we’re quiet and very large,” Flanagan said.
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