Issue No. 182: Quality Control
With our well-being worsening, digital health startups are scaling up, from psychiatry to nutrition coaching.
But now, critics are shining a light on a troubling ethical dilemma.
We’re in the midst of a full-blown mental health crisis. Even before the pandemic, finding the right therapist was a challenge; COVID has only magnified the nationwide shrink shortage.
Enter digital care. Increasing access and cutting costs, millions turned to teletherapy, medication, and more. But as countless startups swoop in, some are drawing backlash for placing profits over patients.
Brain drain. At the center of the controversy is Cerebral, a digital mental health platform valued at $4.8B.
Pushing prescriptions, Cerebral and others have been accused of getting diagnosis-happy, dispensing pills after 15-minute video calls. Case in point, this April, ADHD medication startup Ahead announced it was shuttering after accusations of acting as an “Adderall mill.”
As Cerebral attempts to weather the storm, things have gone from bad to worse.
- Ex-exec Matthew Truebe claims he was fired after objecting to unethical practices. Truebe also alleged that Cerebral failed to act after a data breach of patient records.
- In response, Truepill (Cerebral’s preferred pharmacy) paused all Schedule 2 prescription fulfillments, including Adderall.
- Two days after its CMO defended its practices, CEO Kyle Robertson suspended all prescriptions of ADHD medication for new patients.
Coming to a head, Cerebral is now under investigation by the Department of Justice for possible violations of the Controlled Substances Act.
Buyer beware. The problems extend beyond pills. Earlier this year, TikTok and Meta forced the startup to remove ads for violating marketing policies and misleading consumers. It also came under fire for “predatory” billing practices (weight loss app Noom just settled a $62M lawsuit under similar claims).
Across digital mental health, the troubles are bubbling up from within — even employees are calling foul.
Last summer, Cerebral reneged on salaries and benefits for hundreds of therapists, many of whom report treating rosters of up to 1,000 patients. Echoing the complaint, former psychologists at AbleTo and BetterHelp have called low pay structures and heavy patient loads “abusive.”
Murky marketing practices also raise red flags — after partnering with Travis Scott following concert fatalities, BetterHelp was accused of piggybacking on tragedy for PR. Talkspace, meanwhile, is managing blowback from users whose private text convos were allegedly mined for advertising means.
Shooting from the HIPAA. Privacy watchdogs are also blowing the whistle, especially since digital apps often skirt HIPAA protections. Mozilla recently flagged 32 mental health and prayer apps as “data-sucking machines” of sensitive information.
Apps like these also have notoriously poor privacy protections, says Jen Caltrider, a privacy expert at Mozilla:
“They track, share, and capitalize on users’ most intimate personal thoughts and feelings, like moods, mental state, and biometric data.”
Another issue, employer-sponsored therapy poses new concerns ranging from employee privacy to workplace discrimination.
Beyond teletherapy, the issues persist. Amazon-owned PillPack paid $6M to settle a DOJ lawsuit for overdispensing insulin. Following a patient data breach, chronic care startup myNurse will shut down at the end of this month.
Last year, the FTC filed a complaint against period-tracking app Flo for sharing sensitive user data and against Weight Watchers for illegally collecting kids’ data without parental consent.
And as Big Tech’s fitness trackers become medical devices, many are uneasy about the trove of sensitive user data they now command.
Move Fast and Break Things
Fueling this trend, startups are prioritizing growth at all costs, leading to misaligned incentives that turn users into commodities.
Particularly for venture-backed startups, heftier profits mean happier investors — in 2021, mental health startups raked in a record $5.5B. But lofty returns don’t always equate to positive health outcomes.
For mental apps, says René Quashie, VP at the Consumer Technology Association, there must be more transparency about whom they can really serve:
“There’s a difference between somebody who’s got serious depressive symptoms, and somebody who is going through a stressful period in their life.”
Part of the problem, some say The Great Destigmatization has gone too far, with startups prescribing casual treatments for serious ailments.
When healthcare and blitzscaling collide, there’s a risk that quality control takes a back seat to growth.
A more sensible approach, by moving deliberately and helping people, it’s possible for tech-enabled solutions to support the mentally unwell, nudge us to eat better, and increase the well-being of millions around the world.
👀 A Decade of Wellness
What constitutes “wellness” is constantly in flux. Likewise, the media business is always evolving.
On the Fitt Insider Podcast: mindbodygreen co-founders Jason and Colleen Wachob discuss the intersection of wellness and media, diversifying revenue beyond ads, and the power of content-led brands.
We also cover: emerging health trends and the return of IRL events.
Listen to today’s episode here
The co-founders of SoulCycle are back with an entirely new concept: boutique support groups.
Gather round. The venture, called Peoplehood, combines aspects of group therapy, mindfulness, spirituality, and community into one 55-minute session. Led by Peoplehood-trained guides, these “gatherings” feature breathwork, active listening, and stretching.
Created by SoulCycle visionaries Elizabeth Cutler and Meredith Rice—who both left the cycling studio chain in 2016—the company has already hosted nearly 1,000 participants, both at its Manhattan HQ and remotely.
Filling a void. Community keeps SoulCycle’s wheels turning. This time, instead of fitness, Cutler and Rice are fostering a community centered around mental and emotional health. To that end, Rice added:
“We are modern medicine for the loneliness epidemic.”
A growing crisis, 41% of Americans report symptoms of depression and anxiety, but 60% never seek out therapy. The promise of a support network and mindfulness toolkit—without the stigma of seeing a therapist—could appeal to first-time help-seekers.
TBD. Peoplehood guides aren’t therapists. The startup will need to clearly draw the line between mental health and wellness — as Meredith Rice put it: “it’s vitamins, not medicine.”
Wellness together. Turning to the church of wellness, people are seeking a sense of belonging in social experiences. The latest sect features startups gathering in the name of mental fitness:
- Othership is building community-based studios using guided ice bath, sauna, and breathwork sessions.
- Coa provides live therapist-led classwork for mental and emotional fitness.
- Membership club Remedy Place blends social mingling with recovery services.
Takeaway: Following SoulCycle’s playbook, “relational fitness” could be a group therapy on-ramp or expensive mindfulness cult — time will tell.
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💳 Good Credit
Debuting its fitness credit card, Ness secured $15.5M in seed funding and acquired a portion of WellSet.
Wellness points. Rewarding healthy choices, Ness cardholders can earn 5x points on wellness-related purchases and medical expenses. Through its app, users can redeem on top brands across recovery, boutique fitness, wearables, and digital mental health.
Strengthening its partner network, founders and execs from Sweetgreen, MIRROR, Headspace/Ginger, Thrive Market, Oura, Noom, and other wellness companies participated in the company’s seed round.
Health bank. In addition to securing capital, Ness expanded its offering by acquiring WellSet’s nationwide network of 4,000+ health professionals — cardholders can put points towards therapists, dietitians, doulas, and more.
Work out, cash in. Elsewhere, Ness joins wellness credit card Paceline and a growing wave of startups paying users to get moving.
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⌚️ Smarter Sensors
Glucose monitoring might be coming to a smartwatch near you.
What’s happening: A long-awaited feature, noninvasive glucose monitoring may be the next frontier of wearable tech. To date, however, manufacturers have hit snags in production.
A new development, Apple sensor supplier Rockley Photonics is rolling out VitalSpex, a biosensing platform that can noninvasively monitor glucose, alcohol, and lactate.
A bigger deal, the manufacturer said it delivered the sensors to an “early-access, tier-1 consumer wearables customer.”
Apple, is that you? A Rockley Photonics regular, Apple has long been rumored to be developing glucose monitoring capabilities.
Setting its sights on transforming healthcare, Apple has piloted primary care, developed health-centric software, and doubled down on health hardware (mainly via Watch). Adding blood sugar tracking would lock down its wearable dominance.
Punchline: Across all form factors, next-gen wearables are scaling up. Going mainstream, glucose monitoring capabilities for the Watch could bring metabolic health insights to the masses.
Another scenario, depending on who signed for the Rockley shipment, a competitor may be gaining the edge it needs to finally topple Apple in the wrist wars.
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📰 News & Notes
- Roe v. Wade v. digital women’s health.
- Everlywell launches vitamin and supplement line.
- Fitt Jobs: Level up your career in health & fitness.
- Peloton secures $750M loan as Q3 losses mount.
- Tia opens flagship clinic in Bay Area for “Whole-Woman” integrated care.
- Movement health app movr connects with AI wearable company asensei.
- Aviator Nation athleisure startup jumps into boutique cycling with CA studio.
- Startup Q&A: H.V.M.N. CEO Michael Brandt on drinkable human performance.
💰 Money Moves
- Connected strength training system OxeFit added undisclosed funding from golfer Dustin Johnson and NFL star Jalen Ramsey, bringing total funding to $35M.
More from Fitt Insider: Smart Strength
- StimScience, creators of an electronic sleep aid headband called Somnee, secured $8.3M in a seed round led by Khosla Ventures.
More from Fitt Insider: The Zzz Economy
- Ketamine-assisted therapy provider Osmind raised $40M in a Series B round led by DFJ Growth.
- Kabata, creators of connected dumbbells, secured $2M ahead of its official launch.
- Trustmark, an employee benefits provider, acquired FitReserve, a multi-studio fitness subscription.
More from Fitt Insider: Healthcare-Funded Fitness
- Icelandic gamified digital therapeutic creator Sidekick Health nabbed $55M in a Series B round.
- Handspring Health, a children’s behavioral health company, raised $6.5M in a seed round.
- Dutch fitness chain operator Urban Gym Group secured €16M ($16.9M) and will expand in Europe.
- Upswing Health, an employer-sponsored MSK care provider, pulled in $5M in a seed round.
More from Fitt Insider: The Business of Movement Health
- Georgia-based vegan fast food chain Slutty Vegan added $25M in a Series A round.
- Zen, an MSK and posture adjustment platform, raised $3.5M in pre-seed funding.
- Run coaching platform Runna raised $700K in new pre-seed funding.
- Heard, a back-office platform for mental health providers, raised $10M in a Series A round.
- Voyage Foods, makers of molecular peanut butter, chocolate, and coffee, scored $36M in a Series A round.
- Sustainable food tech firm Tomorrow Farms raised $8.5M in a seed round led by Lowercarbon Capital.
- Cleo, a family benefits platform for working parents, acquired CareTribe, a caregiver platform for the elderly and those with special needs.
More from Fitt Insider: Aging Well
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