WORKWEEK

Digital mental health company Cerebral announced a new focus on value-based care and severe mental illness like substance use disorder.

Their pivot from bread-and-butter conditions like ADHD is not surprising, given all of Cerebral’s drama over the past couple of months. However, Cerebral is in a pretty deep hole right now, and it will take more than a ladder to get out.

Catch Up, Quick

Cerebral is a digital mental health startup founded right before the pandemic. The company provides a subscription-based, virtual service for patients to access therapy, counseling and medications for depression, anxiety and (previously) ADHD. At the beginning of the pandemic, the DEA relaxed the prescribing rules for controlled substances, allowing Cerebral to hire DEA-registered clinicians to evaluate patients for ADHD and prescribe them medication like Adderall. Business boomed.

With fast revenue growth and substantial funding, Cerebral doubled down on its social media marketing to get people (Millennials and Generation Z-ers) subscribed to their platform for ADHD treatment. For example:

• Cerebral spent $13M on TikTok advertising from January to May this year, the third-highest spender on TikTok ads behind HBO Max and Amazon.

Eventually, some employees leaked info on Cerebral’s perverse prescribing and advertising practices. Major pharmacies like CVS and Walgreens cut off ties with Cerebral, refusing to fill any prescriptions of controlled substances from them. Now, Aetna and Optum said they’re removing Cerebral providers from their network.

My Thoughts

Cerebral started with the good intention of increasing access to mental health care. I’m all for that. Love it. But, greed quickly found its way into Cerebral’s business model, luring the company to essentially becoming an Adderall mill—profits before patients. I agree with 7wireVentures’ digital health investor Alyssa Jaffee:

When a healthcare company makes decisions like a social media business it’s terrifying. Add in complete lack of provider ethics and who suffers the most? Patients who trust us, and need us to have their back.

I conclude that trust in Cerebral has eroded.

Digital health is, by nature, virtual. The fact that care is virtual immediately poses an obstacle to developing trust with the provider and company that are delivering care through a screen. So, from the get-go, Cerebral and their providers had to overcome this trust barrier. Did it work? Not sure. But I can tell you it has deteriorated.

The fact that trust in the company has fractured will make it significantly more difficult for the company to provide compassionate treatment for patients with serious mental illnesses like substance use disorder. At its core, substance use disorder treatment requires immense trust between the provider and patient. Patients with substance use disorder are highly vulnerable, and I do fear misalignment between providers protecting the company’s bottom line while also protecting the patient’s mental health.

While value based care models would, theoretically, remove any profit-motivated care, I just don’t envision this working out for Cerebral. Patients don’t know the difference between a fee-for-service model or a value-based care model, so advertising a shift to value based care won’t do much for redeveloping patient trust in the company. Plus, it’s hard to form value based care contracts when large payers like Aetna and Optum are cutting ties with you!

I’ll conclude with a quote I mentioned two weeks ago when discussing private equity’s role in healthcare. It applies to Cerebral and other digital health companies putting profit before patients:

“Profit-seeking [is] a poor fit for any health care system.”