Executive Summary:
Headway is an online platform, which connects mental health care providers who accept insurance with those seeking help.
Headway makes money by receiving a commission from the insurance providers it works together with.
Founded in 2018, Headway has since managed to raise over $100 million in venture funding while accruing a valuation of $750 million.
What Is Headway?
Headway is an online platform, which connects mental health care providers who accept insurance with those seeking help.
The reason for Headway’s existence is that one in four Americans suffer from treatable mental health conditions but with no access to care, largely due to the unaffordability of treatment.
The issue is amplified by the fact that 70 percent of all therapists in the United States don’t accept insurance, which means customers have to pay out of pocket.
Headway tries to solve that problem by creating a marketplace that connects patients with therapists accepting insurance.
And here’s how it works. First, enter your location and other preferences on Headway’s website, which you can access here.
Users then add their insurance details. Headway then automatically calculates how much a session would cost. The first and all upcoming sessions can then be booked right away.
Headway currently serves most states in the U.S., with the rest being projected to arrive in both 2023 and 2024.
Detailing the Founding Story of Headway
Headway, which is headquartered in New York City, was founded in 2018 by Andrew Adams, Daniel Ross, Jake Sussman, and Kevin Chan.
The lack of access to affordable therapy is certainly an issue that CEO Adams has experienced first-hand.
When he first moved to New York City for a new job in 2015, after just wrapping up his studies at Stanford, he found it hard to find a therapist that accepts his insurance.
“Health insurance is built around a medical world dominated by billers and admins, but therapists are small practitioners and don’t have the bandwidth to handle that, so they don’t,” he recalled in an interview with TechCrunch.
What he quickly discovered, though, was that therapists actually wanted to work with clients using insurance. After all, it meant that they could vastly expand the number of customers they were able to serve.
So, after stints at SoftBank and New York-based startup Spring, he decided to give this whole entrepreneurship thing a go.
Interestingly, the three co-founders that initially joined him have all departed Headway since. Jake Sussman, for example, is now an elementary school teacher after over 4 years at the firm.
But for now, let’s rewind back to 2018. Headway’s team, in order to be able to onboard therapists, had to create a dedicated software platform and custom integrations with various insurers, which is what the company focused on in the first two years of its existence.
Meanwhile, it also raised money to support that mission. After an undisclosed pre-seed round back in September 2018, Headway received another $4.5 million in seed funding from Accel in July 2019.
That money proved to be enough for the first few hundred therapists in the New York area. But new capital wasn’t even the greatest accelerant to its business.
The overwhelming majority of therapy sessions switched to online after the Covid-19 pandemic broke out in early 2020. Headway, as a result, grew exponentially and managed to onboard more than 1,800 therapists by the end of 2020.
Its rapid growth would ultimately be rewarded with two additional funding rounds. First, in November 2020, Headway raised $26 million in Series A funding, which it topped up with another $70 million (Series B) a mere seven months after.
It used that cash to not only grow its employee count but also expand into over a dozen of new states, including New Jersey, Florida, North Carolina, Texas, and Michigan.
Furthermore, Headway also extended its reach by partnering with a variety of other HealthTech startups and other types of organizations such as Zocdoc, the Blue Shield of North Carolina, CareFirst, and many others.
Meanwhile, state expansions continued as well. Back in October 2022, Headway finally entered California, which is not only one of America’s richest states but also one that is heavily affected by a mental health crisis as evidenced by the wraths of homeless people it houses.
Today, Headway employs over 300 people, facilitates more than 2.5 million appointments annually, and works together with 20,000 therapists.
How Does Headway Make Money?
Headway makes money by receiving a commission from the insurance providers it works together with.
The insurance providers are willing to compensate Headway because they give them greater access to additional therapists (and billable work) for their policies.
Headway operates what one would call a three-sided online marketplace in which it connects patients with both therapists and healthcare providers.
In order for the marketplace to thrive, Headway needs to ensure that each of the parties that participate in it derive some sort of value.
The pitch on the patient side is fairly evident. Instead of paying $200 to $300 per session, they can get access to vetted health professionals at a fraction of the cost. Headway claims that the cost per session ranges from $20 to $50.
Additionally, clients can receive help much faster. According to Headway, it ‘only’ takes them 5.9 days to receive their first appointment, with some being able to receive help in as little as 48 hours.
Similarly, therapists benefit by being able to tap into a greater pool of potential customers. Founder Andrews, in an interview with Headway’s investor Andreessen Horowitz, highlighted the importance of growing the therapist supply side.
“Our means of delivery and our strategic focus was very particularly on the therapist, which is the scarcest entity in the space. It’s the scarcest asset in the space, it’s really hard for payors to work with fragmented providers in which they feel like there’s not enough of them, and it’s really hard for the patient to find a provider.
So we had a very crystal clear clarity, particularly early on. And again, I’m disclaiming early on because once you do this, you have an opportunity to evolve and do more. But very early on, we had the unambiguous clarity of the therapist being our customer.”
In practice, this meant that Headway created dedicated tools that enabled therapists to serve those customers in the first place, ranging from processing claims to verifying a customer’s policy. Moreover, Headway even built a dedicated provider portal that acts as a quasi-CRM and allows therapists to better manage their clients.
Apart from its promise of generating additional business for practitioners and making their lives easier, Headway also pays out a $250 referral fee for every newly onboarded therapist. Headway also utilizes partnerships, such as the one with Zocdoc, to grow the reach of its platform, which ultimately benefits its therapists.
This has ultimately enabled the platform to grow from 1,800 therapists at the end of 2020 to over 20,000 today.
Insurance companies complete the marketplace trifecta by allowing their customers to receive the help they need at affordable rates.
Headway benefits insurance providers by helping them to expand the types of services they can provide, which would prompt more people to become a customer of theirs.
Moreover, insurance companies are able to vastly increase their efficiency with the help of Headwya’s dedicated software platform, which takes care of credentialing, scheduling, billing, clinical data capture, and client communications.
The software-driven approach that Headway has chosen also greatly benefits the company itself. By building customized connections (likely via APIs and EDIs) for its insurance partners, it creates lock-in effects that minimize churn.
Headway Funding, Revenue & Valuation
Headway, according to Crunchbase, has raised a total of $100.5 million across four rounds of venture funding.
Notable investors include Andreessen Horowitz, Google Ventures, Thrive Capital, Accel, and many other world-class investors.
Headway is currently valued at $750 million (post-money) after raising $70 million in Series B funding back in May 2021.
Unfortunately, Headway is currently not disclosing its revenue figures to the public. However, it previously told TechCrunch that revenues in 2020 grew ninefold.
How Much Does Headway Pay Therapists?
Headway does not directly pay the therapists on its platform. Instead, it has created a software solution that enables therapists to work together with insurance providers.
Consequently, it is the insurance company that pays the therapist. Patients are only charged a portion of the fee, normally between $20 to $50.
This also means that therapists get to keep 100 percent of the fees that they charge for every session.
So, how much a therapist makes on Headway is ultimately dependent on the per-session rate that they charge.
