Headway Raises $26M to Expand Mental Healthcare Access

Many individuals have experienced a decline in their mental well-being this year—influenced by factors such as economic and political instability, the public health challenges presented by Covid-19, and periods of isolation. In response, a U.S.-based startup is announcing new funding aimed at simplifying the process of finding appropriate care for those in need.

Headway, a service designed to connect individuals with therapists who accept insurance, today announced a $26 million Series A funding round. The company intends to utilize these funds to broaden its service area to additional cities, expand its network of participating therapists, and further develop its technology to enhance its search and recommendation capabilities.

Currently, the startup collaborates with approximately 1,800 therapists in the New York metropolitan area and reports that tens of thousands of patients have successfully used its platform to locate and schedule appointments.

This funding round is jointly led by Thrive and GV (previously Google Ventures), with participation from existing investors including Accel (which spearheaded the seed funding), GFC, and IA Ventures. To date, Headway has secured $33 million in funding, with additional support from the founders of One Medical, Flatiron Health, and Clover Health. The company is not disclosing the valuation associated with this funding round.

Headway has established a marketplace that addresses a significant challenge within the U.S. healthcare system: the tendency to prioritize larger organizations over smaller practices.

Individuals seeking therapy typically desire a trustworthy and relatable professional with whom they can constructively address their challenges. Finding such a therapist can be difficult, and Headway aims to assist with a directory resembling a resource like “Yelp.” It’s important to note, however, that unlike Yelp, Headway does not utilize paid placement, offering only unbiased listings. This approach may have contributed to its appeal to investors associated with a leading search engine.

However, this is not the sole difficulty patients encounter.

Many therapists operate as independent practitioners and often do not accept insurance as a form of payment.

Historically, this was partly due to the fact that mental health therapy was not traditionally covered by insurance plans. Additionally, individuals were often hesitant to disclose mental health concerns to employers, who typically administer health insurance benefits. (This situation is evolving, with some industries now offering comprehensive mental health coverage as an employee benefit.)

However, the lack of insurance acceptance also stems from operational complexities. The health insurance industry is structured to work with large hospitals and healthcare organizations that possess dedicated teams to manage claims, process payments, and interact with various stakeholders.

Andrew Adams, co-founder and CEO of Headway, personally experienced this issue when he relocated from California to New York several years ago. He discovered that many therapists were unable to accept his insurance, making therapy financially inaccessible.

“This is the central problem in this field,” he stated in an interview. “The existing health insurance infrastructure is designed for a medical system reliant on billing and administrative staff, but therapists are typically solo practitioners who lack the resources to manage these tasks, and therefore often don’t. Our goal was to simplify this process for them, and we’ve seen positive results.”

Headway has cultivated relationships with insurance providers and functions as an intermediary between them and a network of therapists. The company has developed software that assists therapists—whose primary focus is patient care—with not only appointment scheduling but also, crucially, billing and related administrative tasks.

The company’s business model is noteworthy. Headway does not charge patients for its search service, nor does it charge therapists. Instead, it receives a commission from insurance providers, who compensate Headway for facilitating access to a broader range of therapists and increasing billable services within their networks.

Currently, Headway concentrates on mental health services, primarily connecting individuals with psychotherapists and psychiatrists. However, the platform could potentially expand to encompass a wider variety of therapeutic disciplines and wellness professionals over time.

There are also further opportunities to enhance the services Headway provides.

Adams noted that prior to the coronavirus pandemic, approximately 90% of therapy sessions were conducted in person. Currently, “90% are virtual.”

While Headway does not currently provide the platform for these virtual sessions, offering therapists tools to manage their patient interactions alongside existing administrative support seems like a logical next step.

Furthermore, while the current search engine allows users to find therapists based on criteria such as location, gender, and age, it could be expanded to offer more personalized recommendations, guiding individuals through a detailed assessment to identify their specific needs.

Interestingly, Headway’s services may be equally valuable in healthcare systems with varying levels of government involvement, such as countries with universal healthcare coverage or those with limited public healthcare options.

“The complexities of navigating insurance remain consistent,” Adams explained. “In fact, I would argue that these complexities are even more pronounced.”