Top Behavioral Health Stories of 2023: Bankruptcies, ‘Ghost Networks’ Shake the Industry

2023 has been a tumultuous year for the behavioral health space. Macroeconomic headwinds, including rising interest rates plus unrest in Eastern Europe and the Middle East, has slowed dealmaking. Additionally, many providers have struggled to raise more capital as investors tighten their purse strings.

At least two major companies in behavioral health care have filed for bankruptcy. Others have faced a challenging economic climate by shuttering programs and laying off workers.

Payers have also had a rocky year. The feds have called out several large health plans for their behavioral health “ghost networks.” Additionally, payers are working out the future of virtual behavioral health care coverage, primarily virtual IOP and PHP coverage.


Still, there have been some glimmers of hope for the behavioral health industry. Mental health startups firsthand and Spring Health both managed to land substantial investments.

Additionally, payers and providers have both prioritized creating a path forward for value-based care contracting.

On the federal level, the Drug Enforcement Administration has extended COVID-19-era telehealth flexibilities, allowing virtual medication-assisted treatment companies to continue to prescribe controlled substances until the end of 2024.


Read on for a list of the top stories that shaped the behavioral health industry in 2023.

Click on the subheadings below to revisit that story.

Senators Call Out Aetna, Anthem BCBS, Humana, United Healthcare for Mental Health’ Ghost Networks’

This year, ghost networks came into the national spotlight after a group of bipartisan senators called out large payers for their inaccurate list of in-network providers.

Ghost networks, which often include a list of providers that are no longer in-network, accepting new patients, or have closed their practices, have been a problem in behavioral health for some time. But a renewed federal focus on access to mental health services has brought the issue to the surface. 

The senators called on large providers, including Aetna, Anthem BCBS, Humana, and United Healthcare, to comply with the Consolidations Appropriation Act of 2021, which was established to help protect consumers against surprise bills and increase transparency in healthcare.

Additionally, more legislation might help curb these issues in the future. Last year, a new bill was introduced to the Senate dubbed the Behavioral Health Network and Directory Improvement Act, which is focused on strengthening and enforcing directory accuracy standards and holding health plans accountable.

Solving the ghost network issue will likely take time and collaboration between payers and providers, which will continue into next year.

DEA Delays Ending Controlled-Substances Prescribing Flexibilities, Buys More Time for Virtual MAT Providers

During the COVID-19 pandemic, the DEA loosened regulations allowing virtual providers to prescribe controlled substances without an in-person visit.

This gave rise to several virtual care companies that provided medication-assisted therapy to individuals with substance use disorder, as well as several telehealth companies providing ADHD medications.

In February 2023, the DEA released a new proposed rule that would severely limit care provided to patients who need controlled substances for their condition without seeing an in-person provider first. This proposal was met with backlash from health care providers, advocacy groups and patients.

When this story was published, the DEA filed a temporary extension of the telehealth flexibilities, which extended the telehealth flexibilities until November. The agency has since extended the COVID-era telehealth flexibilities until December 2024. It’s likely the DEA and the behavioral health industry at-large will come to a compromise within the next year.

This was one of several stories published on BHB this year about the DEA’s telehealth flexibilities. This story highlighted a potential path forward for the DEA and digital health companies.

Digital Mental Health Company Spring Health Raises $71M, Hits $2.5B Valuation

In April, tele-mental health company Spring Health raised a whopping $71 million in funding, bringing the unicorn’s total raise to more than $370 million. This brought the company’s total valuation to over $2.5 billion.

The B2B behavioral health organization teams up with employers and health plans to offer digital support, meditation exercises, coaching, therapy and medication. Its clients include Microsoft, The Hershey Company, JB Hunt, Bumble and Fujifilm.

This large funding round came during a lull in digital behavioral health funding. For example, in 2021, digital behavioral health companies raked in $4.8 billion in funding, according to Rock Health. In 2022, that number dropped to $2.1 billion. In 2023, “mega” funding rounds were even more elusive.

This story gave a glimmer of hope to the digital behavioral health industry at a time when funding rounds were down.

“Our investors were so excited by the growth and success of our company that they were eager to ‘double down’ by increasing their ownership in what they describe as one of the most successful portfolio companies they have ever invested in,” Spring Health wrote in a blog post.

Optum, Aetna and UHS Leaders Offer ‘Outcomes Roadmap’ for Value-Based Contracting

Value-based care was a hot topic among payers and large providers in 2023. At BHB’s VALUE event last March, executives from Optum, Aetna and UHS sat down to discuss the future of value-based contracting.

One of the main takeaways from this story was the importance of data sharing between payers, and physical and behavioral health providers. Sharing outcomes could also help enable rate hikes for providers.

“A day doesn’t go by where I don’t get a phone call from one of our partners asking for higher rates,” former OptumHealth Behavioral Health Solutions CEO Trip Hofer said at VALUE. “If you want a higher rate, … I need data. I need to see what you are doing.”

But it isn’t just about reimbursement increases; sharing measurement-based care data could also foster a more collaborative approach to care. When patients with a serious mental illness (SMI) get behavioral health services, this can often lower the cost of overall care. While data sharing can help with value-based contracting and shared savings, it’s not just about the money.

“We need to be able to share the data so that we can figure out who does what and who contributes what,” Mark Friedlander, chief medical officer of behavioral health at Universal Health Services, said. “It’s not all about the dollars and who deserves what share of the pie.”

This story highlighted the key components that both payers and providers need to supply for value-based care to work in the future.

CARD Founder Pushes to Buy the Company Out of Bankruptcy

In June, The Center for Autism and Related Disorders (CARD) filed for Chapter 11 bankruptcy. This came five years after the private equity arm of the financial giant Blackstone (NYSE: BX) purchased the company in a deal valued at $600 million.

The news came after months of rumors regarding CARD’s status, with multiple sources telling BHB they believed the company was exploring strategic alternatives, including a sale.

After the company filed for bankruptcy, it entered a stalking horse bid agreement with a group led by CARD’s founder and ex-CEO Doreen Granpeesheh called Pantogran.

Following this story, the bankruptcy court approved the sale of CARD for $48.5 million. The sale was split into two parts. Pantogran paid $37.4 million to take control of 10 CARD state markets and other assets. The remainder was split between a consortium of PE firm Audax Group’s portfolio companies.

CARD’s troubles and subsequent bankruptcy have been an ongoing story since 2022. This story showed a path forward for the company and a potential new future.

Google Ventures Invests $28M in Serious Mental Illness Company firsthand

In early 2023, GV, previously Google Ventures, invested $28.1 million in serious mental illness-focused startup firsthand.

firsthand uses a peer-support model to help patients with SMI access care. All its peer-support specialists, called firsthand guides, have lived experience with SMI and are trained to engage with a patient at home.

firsthand partners with payers to help address their patients’ SMI needs. The company currently prioritizes the Medicaid sector, where need and health care costs are the highest, Samir Malik, CEO of firsthand, previously told BHB.

The deal signaled GV’s interest in the SMI care space. It also signaled that the investor was interested in face-to-face models and peer support services.

BetterHelp Rakes in $1B in 2022, as Teladoc Plans to Integrate Behavioral Health into Its Chronic Care Strategy

Despite a somewhat rocky 2022, Teladoc Health Inc.’s (NYSE: TDOC) direct-to-consumer behavioral health subsidiary, BetterHelp, raked in over $1 billion in revenue. That’s a $300 million increase from 2021, the company revealed during its Q1 earnings call.

The company’s CEO, Jason Gorevic, noted that in 2022, more than 1 million people received therapy from BetterHelp.

In 2022, the organization struggled with its advertising yield, or how much it spends on advertising to acquire a new customer, for BetterHelp. Gorevic previously blamed this difficulty on venture-backed behavioral health startups making “economically irrational decisions” regarding advertising spending.

In addition to focusing on BetterHelp, Teladoc also announced a new app that integrates behavioral health and primary care. The tool is positioned as a way for Teladoc patients to navigate its spectrum of services easily.

This story signaled that BetterHelp and behavioral health are a big part of Teladoc’s future business strategy. It also demonstrated that BetterHelp had made it through the uptick of competition from digital behavioral health upstarts in 2022.

‘Unexpected and Alarming’: Concern Grows as One of the Country’s Largest Insurers Pulls Back on Virtual IOPs, PHPs

Over the last few years, virtual intensive outpatient programs have become a popular way to care for patients in their homes. IOPs provide an intermediate level of care that can be a step down from inpatient services and a step up from traditional outpatient care.

In the fall, some payers, including CVS Health Corp’s (NYSE: CVS) payer arm, Aetna, announced they are ending virtual IOP and partial hospitalization programs in 2024.

When one major payer decides to stop coverage, that can often mean others follow suit, which could threaten to cut off coverage for many accessing IOP care virtually.

Many providers are concerned that ending virtual IOP and PHP coverage could leave patients in rural communities without care. It could also threaten the business model of the growing number of virtual-only IOP and PHP providers.

This story highlighted the potential changes the loss of virtual intermediate behavioral health coverage could have on the industry and patient care.

Mindstrong Winds Down Operations, Lays Off 130 Employees — Including CEO

Behavioral health provider Mindstrong shuttered operations after raising over $160 million in venture capital funding.

In February, the Menlo Park, California-based company terminated almost all of its C-suite and nearly 130 other jobs and is closing its headquarters.

The company started in 2017 as a digital biomarker-tracking platform for neuropsychiatric and neurodegenerative disorders. It then pivoted to a virtual coaching, therapy and psychiatry service.

Former director of the National Institutes on Mental Health (NIMH) Dr. Tom Insel was a co-founder and ex-president of the company.

After this story was published SonderMind, another digital mental health provider, acquired Mindstrong’s tech assets.

This story highlights the challenges that many companies who raised large funding rounds in 2021 and 2022, are facing.

Invo Healthcare Exiting Home- and Center-Based ABA, Transitioning Business Assets to Other Operators

In 2023, Invo Healthcare shuttered several applied behavior analysis (ABA) subsidiaries. The company left the home-based and center-based autism therapy segments to focus on its legacy offering: school-based behavioral health services, including ABA.

Officials with Invo Healthcare have said publicly and within the company that its efforts to overcome treacherous market trends have been unsuccessful.

Invo Healthcare is shutting down the organization’s Autism Home Support Services, ABA2Day Behavior Services, and Xcite Steps. Progressus Therapy will also see its home- and center-based service end but will continue to operate its school-based service line.

The autism space has generally struggled with high labor costs and rising inflation. This story is just one of many in 2023 that show behavioral health providers scaling back on services.

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