It can be a perilous balancing act for behavioral health providers looking to disrupt the status quo through innovation.

On one hand, novel concepts have the potential to genuinely move things forward for the organization or for its patients. But on the other hand, providers have to work within the confines imposed by the payer and regulatory environments.

If this balance falls out of alignment, it could spell disaster for that company.

“The goal is always to try to do something that balances being unique enough for your program but also standard enough that you can do it with everyone,” Lauren Morrell, co-founder and CEO of Willow Health, said during a panel discussion at INVEST 2025.

Willow Health provides virtual urgent behavioral health care. It provides an alternative space to the emergency department for those who are experiencing suicidal ideation, severe depression, severe anxiety, or challenges with bipolar disorder.

Having a model with a clear chance of success within the current paradigm has wider latitude for clinical flexibility, which can drive improved outcomes. Meeting the key needs of providers and patients helps satisfy the demands on the economic side of the scale.

“The fact that we were able to avoid emergency room stays, that helps with making the business case,” Morrell said of the Willow Health model.

The example of preventing emergency room admissions demonstrates the economic viability of a new care offering by addressing payers’ needs. While health plans may consider behavioral health benefits as a separate part of their business relative to physical health care benefits, payers most often align their priorities around the total cost of care for members. This presents a challenge for behavioral health providers. Behavioral health costs are relatively small within health plans compared to other services. However, research finds overall cost savings relative to increased spending on behavioral health.

For more established behavioral health entities, the conversation becomes more systemic — about addressing market issues to ensure patients get better, payers can succeed and payers address rising costs.

“There is a lack of alignment in the care ecosystem,” Anh Le Kremer, chief strategy and development officer for Sagent Behavioral Health, said during the panel. “The conversations that we’ve had a lot with payers is about how we align the incentives amongst behavioral health, medical specialties and primary care to really recognize the value that behavioral health brings to the ecosystem. I think that’s still a work in progress. Payers haven’t figured that out.”

Sagent Behavioral Health, formerly Nystrom & Associates, is a New Brighton, Minnesota-based outpatient mental health care provider that operates 84 locations in five states. It has been in operation for more than 30 years.

Despite challenges with payers, the panel largely pointed to regulatory issues as the prime limiter on innovation in behavioral health.

“Our bottlenecks aren’t really on the care delivery side,” Charles Raisch, CEO of TownHome Health, said during the panel. “If we look at it from a macro perspective, we have to plan efficiently to make sure that we have that license coming in every state when the new facility is ready to launch.”

TownHome Health offers 24/7 peer crisis care and telehealth support. It provides care in homes that are converted to supporting short-term stays for those that are in non-dangerous and non-suicidal mental health crises.

Patients in the tech-enabled home model live in the home for a time — “about a month or two weeks,” Raisch said — and then are supported through a virtual care model. The homes are an alternative to emergency rooms.

Since the company provides services in homes it operates, it has lower overhead than organizations that take on commercial real estate commitments. 

Raisch noted that it’s not difficult to sell payers or other health plans on establishing partnerships. Rather, the trick is securing comprehensive state-level licenses. Today, the company operates one location in Brooklyn, New York. However, moving into innovative models can be a much harder sale once those models move beyond well-established models. 

Raisch noted that HEDIS measures for hospital admission and readmissions give clear and easy common ground for understanding and measuring success in value-based care models. There are clear ways to get, measure and assess that data.

“That’s a great place for us to get incentives,” Raisch said. “Once you start getting off of the easy ones, that’s where it really falls off very fast.”