Health benefits managers prioritize behavioral health. Here’s what this means for the industry.

Health benefits managers are looking for innovative ways to deliver behavioral health services to their members – and it’s a trend that carriers should keep an eye on.

Health-related behavioral conditions such as depression, anxiety, addiction and others are among the biggest drivers of health care. Additionally, they are often a primary concern for member insurers who work with health benefit managers and employers to craft their proposals.

These realities, in turn, naturally place behavior at the center of benefits managers.

In fact, 29% of health benefits managers say depression is a major concern at their company. Another 20 percent say mental health in general is a top concern, according to a new study of the health benefits of managed care by Credit Suisse.

“I think when you talk about the costs of mental health or behavioral health issues — anxiety, depression, etc. — it’s not just the direct costs of care, which obviously with major depression, etc. can be quite high,” AJ Rice, managing director of equity research at Credit Suisse, told Behavioral Health Business. “. “But it’s employee inefficiency, lack of employee productivity, employees missing time from work.”

All of these factors really add up, Rice continued.

“So when you start looking at that big picture, you say, ‘OK, this is a big problem that we need to look at — and we need to engage with it.’

As part of its study, financial services company Credit Suisse surveyed nearly 300 health benefits managers nationwide about the market, spending trends and priorities for 2023. The study focused primarily on employers with more than 100 employees.

Using numerical point solutions

Referring people to behavioral health care can be challenging. About 130 million people in the US live in areas with a shortage of mental health professionals. This leaves the door open for alternatives to traditional brick-and-mortar behavioral health care.

“On the benefit managers side, it makes them open. If everyone 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 the wait time is quite long is causing people to look for other alternatives.”

With this in mind, benefits managers are looking for digital ways to address behavioral health issues. More than 65% of benefits managers in the Credit Suisse survey said their company offered behavioral health services through telehealth in 2022.

“People engage more easily virtually,” Rice said. “There’s even some discussion of people engaging more easily over the phone and not even having to see their caregiver face-to-face.”

But with more and more point solutions competing for an employer’s attention, vendors are forced to differentiate their products. Russell Glass, CEO of Headspace Health, wrote in an email to Behavioral Health Business.

“We continue to see strong demand from welfare leaders looking for high-quality, affordable mental health support for their employees, and at the same time, leaders are becoming 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 venture is positioned to offer seamless care for corporate clients.

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

On Tuesday, Headspace also unveiled a new partnership with Kaiser Permanente. As part of the deal, Kaiser members will now have access to emotional support coaching from Ginger – free of charge and without the need for a referral or appointment.

Colorado Kaiser Permanente members are the first to have the offer. It will be made available to all Kaiser Permanente members later this year.

“Kaiser Permanente is committed to ensuring that our Colorado members have access to the mental health care they need, when and where they need it,” Mike Ramseyer, Kaiser Permanente’s Colorado regional president, said in a statement.

Kaiser works similarly with Calm and myStrength.

Beyond telehealth

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

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

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

These alternatives to traditional behavioral health care can act as a good gateway. But there should be ways for people to get additional services if needed.

“I think so[ing] really responsive to give people lots of ways to engage with the system,” Rice said. “And given that — to the extent that they progress and have more serious problems — you’re drawing them deeper and deeper into the … continuum of care.”

On a macro level, this could lead to more consolidation in the point solution space going forward. If that happens, mergers and acquisitions could reduce navigational challenges for health benefits managers and allow companies to offer a seamless array of services.

“The other observation we’ve made is that employers are looking for the most comprehensive and proven benefits in the market,” Glass said. “It’s a challenge for welfare leaders to manage dozens of providers at once. And because of the desire to have less disparate systems, mergers and acquisitions in the income world are increasing.”

Since the merger of Headspace and Ginger, Headspace Health has 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 fewer behavioral benefits?

Although the overall U.S. economy is faltering and a potential recession is on the horizon, earnings managers are still optimistic about providing additional resources to employees, according to Rice.

“Our survey seems to show that employers are still quite engaged with the fact that we’re almost at 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 percent — at or very close to pre-pandemic levels, according to the U.S. Bureau of Labor Statistics.

“And so [employers are] fall on increasing incomes, perhaps insulating employees from the cost pressures that exist, rather than saying, “Hey, we’re on the brink of a recession, so I can take advantage of it.”

However, that may be different next year, Rice explained.

“But at this point, I would say the results suggest to me that employers are more concerned about maintaining their labor pool and increasing it than pulling back given the prospect of a recession,” he said.

As more employees prioritize their mental health, companies are under pressure to keep up.

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

“We know so far that the pandemic has created a movement among employees,” Glass said. “Today, employees expect more from their work. Things like rest, flexibility, psychological safety and satisfaction are the most important. When employees don’t feel like they’re getting the things they value from their jobs, they leave in droves.”

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