Health Benefits Managers Are Prioritizing Behavioral Health. Here’s What That Means for the Industry.

Health benefits managers are looking for innovative ways to provide behavioral health services to their members – and that’s a trend that operators should be keeping their eye on.

Behavioral health-related conditions such as depression, anxiety, addiction and others are among the largest cost drivers in health care. On top of that, they are often a top concern the members of insurers, which work with health benefits managers and employers to craft their offerings.

Those realities, in turn, have naturally put behavioral health front-and-center for benefits managers.


In fact, 29% of health benefits managers said depression was a major concern for their company. Another 20% said mental health, in general, was a major concern, according to a new managed care health benefits survey by Credit Suisse.

“I think when you talk about the cost of mental health or behavioral health issues – anxiety, depression, etc., – it’s not just the direct care costs, which obviously, in severe depression and so forth, can be pretty high,” A.J. Rice, managing director of equity research at Credit Suisse, told Behavioral Health Business. “But it’s employee inefficiency, employee lack of productivity, employees missing time from work.”

All of those factors really add up, Rice continued.


“So when you start to look at that total picture, you say, ‘Okay, this is a big issue that we need to address – and we need to engage with.'”

As part of its survey, the financial services company Credit Suisse polled nearly 300 health benefits managers across the country about the market, cost trends and priorities for 2023. The survey focused primarily on employers with more than 100 employees.

Tapping into digital point solutions

Getting people into behavioral health care can be challenging. About 130 million people in the U.S. live in regions with a mental health clinician shortage. This leaves the door open for alternatives to traditional brick-and-mortar behavioral health care.

“On the benefit-manager side, it’s making them open. If everybody could see the psychiatrist, without a long wait time, or the psychologist, you probably wouldn’t need some of these other options,” Rice said. “But I think the fact that those wait times are quite long is getting people to look at some other alternatives.”

With that in mind, benefits managers are looking at digital ways of addressing behavioral health concerns. More than 65% of benefits managers in the Credit Suisse survey said that their company was offering behavioral health services through telehealth in 2022.

“People engage more readily virtually,” Rice said. “There’s even some discussion about people engaging more readily via the telephone, and they don’t even have to see their caregiver face to face.”

But with more and more point solutions competing for employer’s attention, vendors are forced to differentiate their products. Benefits managers are now prioritizing engagement, return on investment, affordability and outcomes, Russell Glass, CEO of Headspace Health, wrote in an email to Behavioral Health Business.

“We continue to see strong demand from benefits leaders seeking high-quality, accessible mental health support for their employees, and at the same time, leaders are being more discerning,” Glass said.

Headspace Health was founded in 2021, when virtual behavioral health company Ginger merged with mindfulness and meditation app Headspace. Following the acquisition, the joint company positioned itself to offer a continuum of care for enterprise clients.

The company boasts more than 3,500 clients and partners, including major payers like Cigna (NYSE: CI).

On Tuesday, Headspace likewise revealed a new partnership with Kaiser Permanente. As part of the deal, Kaiser’s members will now have access to emotional support coaching from Ginger – at no cost, and with no referral or appointment needed.

“Kaiser Permanente selected Ginger to help provide nonclinical emotional support coaching and expand the continuum of digital mental health tools we make available at no cost to all eligible adult members,” Dr. Don Mordecai, psychiatrist and national leader for mental health and wellness at Kaiser Permanente, said in a statement. “The Ginger offering sits between our self-care offerings and our clinical care, providing personalized text-based support from trained Ginger coaches to our members in the moment when they need it the most, anytime day or night.”

Kaiser similarly works with Calm and myStrength.

Beyond telehealth

But telehealth isn’t the only digital tool to catch the interest of health benefits managers. New point solutions are offering alternative ways to engage. For example, there are several tools on the market that use game-theory to help folks work through challenges in their lives, Rice said.

Others who follow the space have made similar observations in the past.

“What we’ve watched happen is the creation of almost an entire sector in itself where not just one solution covers behavioral, the way that it might have been thought of historically,” Laura Veroneau, a partner at Optum Ventures, said during a panel at Going Digital Behavioral Health Tech 2022. “But there’s companies focused on pediatrics and companies focused on high-cost areas like SUD or eating disorders, or OCD. We’ve watched this creation or emergence of a whole sector of behavioral that can be invested in broadly. And not a one-size-fits-all solution.”

These alternatives to traditional behavioral health care could act as a good front door. But there should be ways for individuals to get additional services if needed.

“I think it’s be[ing] really sensitive to give people many ways to engage with the system,” Rice said. “And being mindful that – to the extent they progress and they have more significant issues – you’re getting them engaged deeper and deeper into the … continuum of care.”

On a macro-level, this could drive more consolidation in the point solution space in the future. If that happens, M&A could cut down on navigation challenges for health benefits managers and allow companies to offer a continuum of services.

“The other observation we’ve made is that employers are looking for the most comprehensive and proven benefits out there,” Glass said. “It’s challenging for benefits leaders to manage dozens of vendors at a time. And because of the desire to have less disparate systems, M&A in the benefits world is on the rise.”

After Headspace and Ginger merged, Headspace Health made a number of acquisitions including Shine, a mental health app focused on caring for people of color, and wellness company Sayana.

But Headspace isn’t the only digital health company making acquisitions. Mental health unicorn Lyra Health acquired employee-assistance program ICAS World for an undisclosed sum in January.

Does a slowing market mean less behavioral benefits?

While the overall U.S. economy is slumping and a potential recession is on the horizon, benefit managers are still bullish about providing additional resources to employees, according to Rice.

“Our survey would seem to indicate that employers are still pretty engaged in the fact that we’re at near full employment,” Rice said. “We want to offer benefits that are competitive with others in our industry.”

The nation’s unemployment rate is currently below 4% – at or very close to pre-pandemic levels, according to the U.S. Bureau of Labor Statistics.

“And so [employers are] falling down on expanding benefits, maybe insulating employees somewhat from the cost pressures that are out there, rather than saying, ‘Hey, we’re on the cusp of a recession, and therefore I can take advantage of it.’”

That may be different next year, however, Rice explained.

“But as of right now, I would say the results suggest to me that employers are more concerned about maintaining their labor pool and growing it than they are about pulling back given a recessionary outlook,” he said.

As more employees prioritize their mental health, companies have the pressure to keep up.

And in a competitive job market, retention continues to be a top priority.

“We know by now that the pandemic sparked a movement among employees,” Glass said. “Today, employees expect more from their jobs. Things like time off, flexibility, psychological safety and fulfillment are top of mind. When employees don’t feel like they are getting the things they value from a job, they are resigning in droves.”

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