Can Psychotherapy Really Survive the Onslaught of Venture Capitalism? By Maggie Mulqueen, PhD on 9/1/22 - 12:15 PM

Maybe you, like me, have been receiving solicitations inviting you to join various mental health platforms. Maybe you’ve seen online ads for these new companies with endorsements from the likes of Michael Phelps or Simone Biles and got curious about what they are offering potential clients. Or maybe, just maybe, you’re a dinosaur like me with an established private psychotherapy practice and thought none of this applies to you. In fact, there has been a huge influx of private equity funds into the world of mental health to the tune of over 2 billion dollars in 2020 (an increase from 275 million dollars in 2016) with the goal of changing how mental health services are delivered. Ignoring this reality risks an end for psychotherapy as we know it. Similar to the fate of the dinosaurs—it’s a moment of adaptation or extinction.

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When private equity funds target a market, it is because they see the potential for profit and growth. Analogous to the consolidation of hospitals and other health care services, the decentralized offering of most mental health services is ripe for the roll-up strategy used by investors to buy and build larger networks, thereby allowing them to wield more bargaining power with insurance companies and providers. Whether or not we realized it, many of us felt this change when insurance companies shrank the clinical hour from 50 minutes to 45 minutes, thus enabling providers to see 2 clients in 90 minutes.

The existence of these mental health platforms creates many complex scenarios for clients and providers alike. After doing research and talking with providers who have worked for one of these companies, it is now clear to me that the lines between what is legal and what is ethical are blurred. What is also clear is that when the delivery of mental health changes, the “product” itself changes.

We know people are struggling mightily to find mental health providers, especially those in rural areas or those who want to use their insurance. The pandemic only intensified a pre-existing problem of matching clients to clinicians. The ability to use telehealth and receive insurance reimbursement was certainly a godsend for many of us during the pandemic. In some cases, clinicians could even practice across state lines, opening up the potential for new client markets as well as allowing for continuation with clients who relocated. For many of us, this change was nearly seamless. But for the most part, we continued to function as individual providers.

The thrust of telehealth platforms is to channel individual providers into what is ostensibly a virtual group practice. The owners of the practice—private equity or venture capital firms—benefit from amassing a large number of practitioners under one umbrella to help leverage reimbursement rates from insurance companies as well as set fees for prospective clients. The benefit for providers is not having to pay for office expenses, billing services, or marketing.

But key questions remain as to who “owns” the clients, especially around issues of liability. The most obvious questions arise if a client commits suicide, but there are other important issues in this arena. From my research, there appears to be no consensus about how clients are vetted or if providers can take clients with them if they leave the company. One clinician I spoke with described a virtual speed dating-like service offered to potential clients. They received free 10-minute sessions with a number of clinicians to help them select a best-fit therapist. Other companies just match clients with clinicians who have availability. Some companies require a noncompete clause, in effect maintaining “ownership” of clients when clinicians leave. On the surface, none of these practices are illegal, but it is important to consider how these practices could easily be manipulated to become unethical. What is promised to clients about how treatment will be delivered? And, just as importantly, is this the kind of work that we signed up to do when we chose to become therapists?

Adding to these concerns is the pay structure used for clinicians. Many of the companies have a matrix where reimbursement rates are higher if you see more clients. In addition, one practice owner I spoke with who was offered a buyout by one of these companies said that although the initial offer was well above market rate for his practice, the fine print made it clear that he would need to stay on as director and hit various target goals in order to realize his compensation. In the end, he recognized it was a case of “too good to be true.”

Losing control of how many clients you need to see and discretion about which clients you will see raises serious ethical questions about quality of care delivered. It most certainly also goes to the heart of job satisfaction. If, as it appears to be, there is high burnout working for one of these companies, which leads to high turnover of clinicians, then what happens to the continuity of care for clients?

And if providers’ reimbursement is linked to incentives that run the risk of reducing or compromising patient care, how can we avoid being in a potential conflict of interest? Sidestepping these changes by not joining one of these groups has consequences, too, as the marketplace changes. Individual providers or small group practices may not stay competitive with the reimbursement rates of larger groups in a geographical area.

We need look no further than the changes that have come from the consolidation of insurance and hospital markets to see the array of problems that arise when the delivery of health care resides in the hands of MBAs rather than MDs. Despite the glaring fact that there is no clear evidence that consolidation actually improves quality of care, the trend toward changing the landscape for how people will receive mental health services is underway and it is worrisome.

Health care has become a data-driven market, from the quantity of services provided to the choice of prescriptions offered. What happens to all the data that is collected? There is a lack of transparency about who owns patient data and how it will be used by companies to increase their profitability. The backbone of therapy is confidentiality, but how can we protect our clients from the accrual (and potential sharing) of data required by these companies?

For this dinosaur, the transition to telehealth was an important and welcome adaptation to a pandemic. I benefited from being able to continue to work and not lose income. More recently I have adopted a hybrid practice, seeing clients either virtually or in person. Returning to in-person work reinforces my belief that for some people, telehealth is a poor substitute for the intangibles that come from sitting across from one another in an office. I think back to an earlier adaptation I made when I used to handle all my own billing, when life was simpler and Blue Cross/Blue Shield was basically the only game in town. Eventually, I decided that paying someone to do my billing was cost effective and certainly improved my own mental wellbeing. However, unlike what is happening through this influx of outside money today, none of these changes have threatened my autonomy as a clinician.

I am in the twilight of my career and able to be selective about my caseload. It is easy for me to say that I would choose extinction rather than work for someone else. If, instead, I were just starting out, I am not sure how I would manage the current market trends for establishing a practice. But regardless of my individual choice, as a profession we need to be active and aware that simply locking the doors is not going to keep us safe from the real and present threats to the practice of therapy as we know it.

Psychotherapy as a field has adapted over time from the early days when psychoanalysis was the mainstay of treatment to the present day when many theoretical orientations are available to clients. As our field confronts the inevitable forces of change, we need to remain vigilant that even if these changes are legal, that the ethics of our profession remain intact. For psychotherapy is an art as well as a science, and the essence of our work has always been about the relationship between provider and client.


I am grateful to Dr. Laura Feder and Dr. John Lusins for their time and insights on the questions raised in this essay. For further reading on this topic, I suggest:

Mental Health, Meet Venture Capital (APA)

The Toxic Impact of Venture Capital on Psychotherapy (AMHA)  

Venture Funding for Mental Health Startups Hits Record Highs as Anxiety, Depression Skyrockets (Forbes)  

File under: Business & Marketing, Therapy & Technology, Online Therapy