Wrap-Around Services, New Funding Models Hold Promise for Improving SMI Treatment

The behavioral health industry often falls short when caring for underserved communities with serious mental illness and substance use disorders.

Despite the infusion of capital that poured into the mental health industry over the last few years, the bulk of that investment has been centered around low-acuity patients with commercial health plans. However, many are now looking to use innovative models to serve high-need patients with SMI and SUD that may have social determinants of health risk factors.

In 2021, venture capital poured more than $5 billion into the mental health industry, according to Rock Health


“It was all going to the shallow end of [care]. So I really felt passionately that people in the deep end of the pool, people with serious mental illness are sometimes dual diagnosed with a serious mental illness and SUD or largely being neglected by entrepreneurs and by innovators,” Dr. Tom Insel, co-founder of Vanna Health and former director of the National Institute of Mental Health, said at Behavioral Health Tech.

“These are people who need innovation more than anyone. Arguably, they’re also perhaps the most expensive patients in the system. So what an opportunity. There’s nothing better than going into an area where you’re spending a lot of money and getting lousy results; it’s prime for innovation.”

Vanna Health is a startup that connects patients with SMI to community resources with a value-based care approach, plans to use the new funding to help it grow out its partnerships and launch in a small number of states. It has raised $29 million in funding.


Providers and innovators often miss some key components when caring for this population: the wrap-around services. Patient engagement is a critical part of recovery and success, but it’s difficult for patients to be engaged if they are concerned about housing or food.

“Housing is a huge need for the population we serve and focusing only on getting folks out of the hospital and into the community without looking at housing options for them is neglectful,” Shar Najafi-Piper, CEO of Copa Health said at the event. “We certainly want to make sure that we take a holistic approach to care. I’ve seen housing, health care and day programs work very well together.”

Founded in 1957, Copa Health provides a number of behavioral health and wrap-around services to individuals in Arizona.

Still, getting many of these holistic services funded and reimbursed can pose several challenges in today’s environment.

For example, the funding in public mental health programs, which often care for vulnerable populations, can be fragmented and based on ticking boxes for reporting requirements and compliance.

“Most are fee-for-service systems, so you get paid for delivering a service that well-meaning general political leaders determine what the needs are … ignoring so many other things that are critical, particularly people that have severe persistent mental ailments,” Dr. Jonathan Sherin, clinical professor of psychiatry at UCLA and former director of the Los Angeles County Department of Mental Health, said. “So those things don’t get done because you can’t get the need to sustain your company.”

Sherin instead pitches that states set a goal, such as decreasing the number of people with SMI homeless in Los Angeles by 10% over the next five years and then giving the state-funded mental health department the funding to work on this goal how they see fit. This would enable care teams to focus on getting patients the wrap-around services and connected in a community instead of X number of psychiatric visits per year.

On the payer side, the move towards holistic care could be helped by the rise in value-based care contracts. Najafi-Piper noted that for these payer partnerships to come together, providers need to focus on outcomes and HEDIS measures because that is what payers are focused on.

Still, true value-based care in the behavioral health world has yet to happen, partly because of the systems in place. But if payers could add flexibilities, this could make room for more innovative partnerships.

“There’s also a behemoth set of systems, the bureaucracies that exist and then in many ways, the incentives of the bureaucracies is to maintain themselves,” Sherin said. “A lot of plans spend maybe half of their budget to employ people to do the compliance work and to prepare for audits and to deal with getting contracts with the government writing contracts… I think loosening up the relationship with the entrepreneurial world so that we can do things faster and more efficiently would be really an important thing to do.”

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