The Hyde Park Angels “New Investment Series” profiles our most recent investments by examining the portfolio company and its future trajectory from two perspectives: the portfolio company’s CEO and the HPA leader who made the deal happen. This edition focuses on Regroup Therapy.
Regroup Therapy provides virtual staffing of psychiatrists and mental health professionals to health entities, and recently raised its $6.1M Series A round from OSF Healthcare, HLM Venture Patners, OCA Ventures, Furthur Fund, Impact Engine, and Hyde Park Angels. We spoke with HPA Deal Lead and Regroup Therapy Board Member, Sapan Shah, President and Partner at Flagship Physicians, and Regroup Therapy CEO and Founder David Cohn to learn more about the company, the telehealth space, and opportunities for future growth.
Starting off, what does the telehealth landscape look like now?
David: You have two buckets: one that is a B2B bucket and then another that is a B2C bucket. Most of the players are focused on the B2C part, on-demand healthcare services that are more aimed towards self-insured employers and more aimed towards end consumers directly. This model is structured in a way where people with less serious health conditions can get really fast, dynamic access to somebody, a generic provider of care.
As you progress into more serious health conditions and particularly in mental health, you really need a different model where you have continuity of care, where patients see the same provider. That is where it makes more sense to deliver the services in a B2B way, and in our case, to a healthcare entity.
For example, in B2C you have services like Talkspace which is text based, non-prescribing, and basically a psychologist over text. In a Teladoc situation, you might have a rash and pick up your cell phone and say, “Put me through to the first available dermatologist. I want to show him this.” Without knowing anything else about your health or your history, they’re able to diagnose you. On the other end of the spectrum are B2B solutions like AbleTo, which sells its services to insurance companies. Insurance companies look at which of their members could use their modules to treat behavioral issues. Companies like Regroup use video to deliver therapy to patients who are inside of any existing healthcare center.
Sapan: The sweet spot for telehealth from a clinical medicine perspective is where there are pockets of diagnosis or interactions or clinical data where it can be evaluated remotely and not necessarily rely on physical exam. If you look at it, we’ve seen a lot of teleradiology for more than ten years. Now, it seems like whether it’s dermatology, behavioral health, or certain types of acute respiratory things, all of these businesses are trying to find gaps and areas of medicine where ultimately the clinician feels comfortable making a diagnosis and providing a treatment without the physical exam. Perhaps no specialty is better suited than psychiatry and behavioral health for this medium.
What are the biggest medical issues that patients are looking to get treated through these behavioral health telehealth services? Is there a specific condition patients on the Regroup platform consistently seek to get treated?
David: If you think about the way we work, we’re receiving a referral a lot of times from a primary care physician. The rate of incidence of medical issues we see maps pretty well to what you would see in the general population. The largest issues are depression, anxiety, and some substance abuse disorders including alcohol.
From a clinician standpoint, there are obviously real benefits to being able to work remotely and have flexible schedules. What are some of the other benefits clinicians see from working on a telehealth platform like Regroup?
David: What I hear is that particularly psychiatrists at the beginning of their careers get into this because they really want to help the patients who need the care the most. Then they start to discover they’re in a part of the city that they don’t want to spend their day in, or in a correctional institution and don’t feel safe. On the platform, they feel like they’re doing satisfying clinical work – the kind they always wanted to do – without having to sacrifice their own feeling of personal safety.
On the other side, clinicians really deal with no shows a lot in private practice. It’s expensive for them and they end up doing a lot of administrative work. We’re able to greatly reduce their paperwork and when they’re working with us, they get paid for any time that they’re giving us.
Recently, in addition to hospitals, you’ve been doing more work with outpatient facilities, corrections facilities, and even Native American reservations. What makes these markets such big opportunities for you?
David: Native American reservations are autonomous areas, which means they often don’t require state licensure in the way that other entities do. Statistically there’s a huge need for these services and they tend to be in isolated areas where clinicians don’t want to go or can’t go. I love this combination of higher level of need, very hard for them to find resources otherwise, and a model where there is less friction making that clinical match. We’re able to deploy high-quality physicians into these tribal areas.
In the corrections space, you have a similar situation where physicians and clinicians tend not to want to spend their days in those settings but absolutely want to help the inmates. A lot of times, inmates are in prison because they had a mental health issue that was not taken care of outside of the correctional institution and are picked up for something mental health-related. There’s another component to the correctional piece; there’s increased scrutiny from the Department of Justice to make sure that inmates have their civil rights met, including access to these services.
How does Regroup stay competitive in the market?
Sapan: David has done a great job identifying different buckets of customers. We’ve talked at length about how Regroup can sell to so many types of customers that effectively triaging those opportunities in terms of breadth, immediate impact, size of deal, location, have to come into some kind of pecking order. David and his team have really built out that pipeline quite deeply and quite thoroughly. In the past nine months, they have made substantial progress through that pipeline, escalation of closed contracts, and the foundation and basis for the large amount of growth they’ll see in the next 18-24 months as they’ve proven out their effectiveness in places like correctional facilities or community hospitals.
What has Regroup’s approach been in targeting specific types of facilities or health entities?
David: At our heart, we are a virtual staffing business. We have to take into account our ability to staff to those health entities. That’s why you see us hitting critical mass in Midwestern states because on the recruiting on the side, we can staff more efficiently and more quickly when we focus on a geographic area.
What is your biggest goal for Regroup therapy over the next 12 months?
David: I want the largest amount of patients with access issues getting access to high quality mental health services. I think if we do that, the growth and the money comes. We have to focus on the mission. It’s what brought everyone together, it’s what motivates the team day in and day out.
What is your biggest obstacle to achieving that goal?
David: I actually think it’s the logistical balance between the recruiting and the sales side. We have to keep those things in balance. We can’t hire too many clinicians ahead of deployment and of course if we’re not selling at a fast-enough rate, we’re out of balance.
Sapan: One of the obstacles for David and the team is the number of hours in the day. They are working around the clock, and they work very hard. There is so much of a need and there are so many places that they can address and be successful with their services and impact patients. It’s a time limited thing. The recent raise and the growth of their team now will help accomplish more of these goals more quickly.
How do you plan to work together in this next stage of Regroup’s growth?
David: I’m thrilled that Sapan remains on the board. His counsel has been very valuable to me. I expect Sapan to continue to drive us, to make sure that we are hitting goals that are ambitious that we’ve set out for ourselves.
Sapan: David has done so much in the last six to nine months. It has been a lot of work. His success is twofold: simultaneously having the best new sales growth while also managing the expectations and presentation of a subsequent raise.
We’re so optimistic and pleased with Regroup’s progress because the people have been top-notch from the beginning. Our input from HPA and from me with Regroup will remain consultative where we can help, where we can make intros, where we can chime in on strategy. The heavy lifting is being done by David and his team, and their success is because of their great efforts.
Story edited for length and clarity.