The Commonwealth Club's recent talk on reforming our national mental health system got me thinking about this niche market in health care. Advocates for metal health reform want better preventive care and more research funding. The Mental Health Parity and Addiction Equity Act (MHPAEA) ensures that insurance plan reimbursements will sustain mental health spending. Money will flow and providers will profit.
The National Institute of Mental Health (NIMH) funds basic research in neuroscience, behavioral health, and other mental health areas. The NIMH's total budget for FY 2014 was almost US$1.5B. The HHS's Substance Abuse and Mental Health Services Administration (SAMHSA) total budget request for FY 2015 is US$3.6B. These are by no means the totality of the federal government's mental health spending, as the VA's mental health programs and other efforts can attest. State and local governments also spend significant sums.
The ACA makes the policy jungle in health care more confusing than ever, but I believe entrepreneurs have room to maneuver. Suffice it to say that disruptive enterprises have a clear path to determining the market opportunities for innovative mental health solutions. The NIMH Statistics page reveals the size of this market by disorder, but not by dollars spent. IBISWorld estimates the total size of the mental health market at $16B with no dominant players. Compare that to the two dollar amounts I quoted above and see that the federal government accounts for at least one third of this market. The SAMHSA Financing and Research page describes the federal government's multiple financing methods for mental health programs. Selling into those programs and mastering their data sets represents the low-hanging fruit for early adoption.
Safeguarding information matters. Entrepreneurs must incorporate FERPA and HIPAA compliant safeguards into their data management systems. Data privacy violations open the door to an unforgiving legal environment. I fully expect Big Pharma to use lawfare against startups that offer non-drug treatment modalities for mental health problems. Startups using strong PaaS services can avoid the worst expenses. An ounce of prevention will be worth a pound of cure, to borrow a health care phrase.
The health care sector is not a typical Alfidi Capital focus area. It is more heavily regulated now than ever, which makes it harder than ever for smaller companies to grow market share. Big companies that want to control costs under the insurance exchange regime may look to acquire smaller companies that can offer savings. Startups have room to make money in mental health. They'd be crazy not to try . . . pun intended.
The National Institute of Mental Health (NIMH) funds basic research in neuroscience, behavioral health, and other mental health areas. The NIMH's total budget for FY 2014 was almost US$1.5B. The HHS's Substance Abuse and Mental Health Services Administration (SAMHSA) total budget request for FY 2015 is US$3.6B. These are by no means the totality of the federal government's mental health spending, as the VA's mental health programs and other efforts can attest. State and local governments also spend significant sums.
The ACA makes the policy jungle in health care more confusing than ever, but I believe entrepreneurs have room to maneuver. Suffice it to say that disruptive enterprises have a clear path to determining the market opportunities for innovative mental health solutions. The NIMH Statistics page reveals the size of this market by disorder, but not by dollars spent. IBISWorld estimates the total size of the mental health market at $16B with no dominant players. Compare that to the two dollar amounts I quoted above and see that the federal government accounts for at least one third of this market. The SAMHSA Financing and Research page describes the federal government's multiple financing methods for mental health programs. Selling into those programs and mastering their data sets represents the low-hanging fruit for early adoption.
Safeguarding information matters. Entrepreneurs must incorporate FERPA and HIPAA compliant safeguards into their data management systems. Data privacy violations open the door to an unforgiving legal environment. I fully expect Big Pharma to use lawfare against startups that offer non-drug treatment modalities for mental health problems. Startups using strong PaaS services can avoid the worst expenses. An ounce of prevention will be worth a pound of cure, to borrow a health care phrase.
The health care sector is not a typical Alfidi Capital focus area. It is more heavily regulated now than ever, which makes it harder than ever for smaller companies to grow market share. Big companies that want to control costs under the insurance exchange regime may look to acquire smaller companies that can offer savings. Startups have room to make money in mental health. They'd be crazy not to try . . . pun intended.
