Behavioral Health Startups Foresight, Headspace, SonderMind, Eleanor Lay Off Staff
Additional reporting by Chris Larson
A slew of behavioral health startups have laid off employees.
These startups, many of which have raised tens of millions of dollars in the past year, include Foresight Mental Health, Headspace Health, SonderMind and Eleanor Health. This comes as corporate-backed organizations across the board continue to shrink in the face of new economic headwinds.
“They have to be much more careful about capital efficiency, particularly when it comes to technology costs, but also operating costs and overall staffing,” said Nisha Dua, managing partner at BBG Ventures. previously he told Behavioral Health Business.
Foresight makes more job cuts
This is the third round of layoffs at Foresight Mental Health this year. In total, the behavioral health provider cut two-thirds of its administrative team, or 327 positions, in 2022. The most recent layoffs account for 40 of those positions.
Foresight Chief Executive Greg Serrao said the reductions are aimed at making the company financially sustainable.
“When I arrived in April, we had 487 administrative employees for 520 doctors. A ratio of almost one administrative person to clinical person is unheard of in healthcare services,” Serrao told BHB in an email. “It’s just not sustainable. We needed to reduce headcount and we completed two current reductions, one in July and one in September. Those cuts reduced the administrative staff to 200.”
After the December layoffs, the company now has 160 administrative employees, a number that Serrao said is “sustainable.”
The administrative reduction was made possible in part by the company’s new practice management system, according to Serrao. The system includes an electronic health record (EHR), as well as billing and collection information.
“Prior to this new system, the company needed to rely on manual processes to connect one system to another system and therefore faced problems instead of finding a technology solution that would allow the company to scale with much less administrative staff,” Serrao said. “The new system we implemented is allowing us to streamline processes and be much more efficient.”
Founded in 2017, Foresight offers in-person and virtual mental health services. The company closed a Series C funding round this summer. Terms of the financing were not disclosed. Foresight has some 40 offices, according to Serrao.
The reductions are part of the company’s broader strategy to reduce cash consumption. According to Serrao, the company’s monthly cash burn has been reduced by 67% since April 1.
“Foresight is a very different company today than it was in April,” Serrao said. “While we continue to receive 3,000 new appointment requests per month and provide nearly 40,000 sessions per month, we are doing so with 68% fewer administrative staff. We have redesigned almost every functional area and every business process.”
Headspace’s ‘last resort’
Headspace Health has cut staff by 4%, according to Bloomberg. That works out to about 50 positions in total.
“With the privilege of supporting the mental health and well-being of millions of people around the world, it also comes with the great responsibility of focusing on the health of our business and protecting ourselves for the future,” a Headspace spokesperson wrote in an email. to BHB. “Earlier this year, we implemented preventative cost-saving initiatives, but we have always viewed a reduction in force as an absolute last resort given the very real and profound impact on the lives of our employees. We are taking this step to equip Headspace Health as a long-term sustainable business that can withstand various economic environments while continuing to execute on our mission. It is worth noting that our care team was not affected by this reduction.”
Headspace Health formed in 2021 after a virtual behavioral health company Mental wellness and ginger startup Headspace merged. At the time, the combined company was valued at more than $3 billion. Since the acquisition, the company has launched its Unified Behavioral Health Offering and made a series of acquisitions, including Shine Y sayana.
While this is the first reported layoff for Headspace this year, its main virtual mental wellness competitor, Calm, laid off 20% of its staffor about 90 people, this summer.
SonderMind seeks profitability
Headspace Health wasn’t the only behavioral health unicorn to cut jobs this winter. SonderMind, a technology-backed behavioral health matchmaking company, laid off 15% of its staff, or about 50 people, on Denver Business Magazine first reported.
SonderMind CEO and co-founder Mark Frank said the layoffs are an effort to move toward profitability.
“SonderMind’s mission to increase access, expand utilization and improve clinical outcomes in mental health is always our top priority,” Frank said in an email to BHB. “Given the current economic conditions, we made the decision to accelerate our path to profitability, to ensure that we can remain independent and continue to provide high-quality technology-assisted mental health care. As part of this decision, we needed to make changes to teams and roles, which meant taking the difficult step of laying off some of our colleagues.”
This news comes shortly after SonderMind acquired the mental health management app. whole brain for an undisclosed amount.
Founded in 2014, SonderMind has gained interest from investors in recent years. In 2021, he closed a $150 million Series C funding roundwhich brought his total amount raised to $183 million.
The SonderMind employees affected by the layoff received seven weeks of severance pay plus two weeks for every six months at SonderMind. The company also agreed to pay three months of full premiums for COBRA health care coverage.
Eleanor cuts staff
Lastly, addiction treatment provider Eleanor was also affected by the layoffs. Multiple sources told BHB that the layoffs affected an estimated 18% to 20% of the startup’s staff. BHB was unable to confirm that range with Eleanor, and the company did not respond to a request for comment.
The Waltham, Massachusetts-based provider uses a population health approach to treat substance use disorder (SUD). Their services include medication-assisted treatment, psychiatry, therapy, and coaching services.
This news comes less than a year after the startup announced a $50 million Series C funding roundbringing the company’s total raise to about $82 million.