Exclusive: Author Health books $115M to treat seniors with serious mental illness
Author Health debuted with $115 million to support Medicare Advantage users with serious mental illness, CEO Katherine Hobbs tells Axios exclusively.
Why it matters: Demand for mental health services spiked during the pandemic, putting additional pressure on already limited resources, and among adults with serious mental illness (SMI) — or those whose condition seriously impairs their functionality — some 71% have not received any treatment.
Details: General Atlantic led the investment and Flare Capital Partners participated.
- The $115 million in financing — the first tranche of which was provided in November 2022 — will go to expanding into new markets, honing the tech platform, and hiring and training clinicians.
- Author is not fundraising, and Hobbs declined to say when the company might raise next.
How it works: The Boston-based company is focusing on Medicare Advantage members with SMI and substance use disorder, starting in South Florida in partnership with Humana.
- Author's team-based, virtual and in-person care model employs geriatric psychiatrists, nurse practitioners, therapists and community health workers.
- Services include psychotherapy, medication prescribing and management, support for caregivers and social needs, health system navigation assistance, and primary care consultations.
Be smart: Roughly 25% of Medicare plan members live with mental illness, while members of traditional Medicare plans are more likely than those with MA to have an SMI such as schizophrenia, bipolar disorder, or major depressive disorder, per a 2020 Commonwealth Fund report.
- The report also uncovered the highest prevalence of mental illness among three groups: people under 65 who qualify for Medicare because of disability, low-income people dually eligible for Medicare and Medicaid (so-called duals), and Indigenous and Latino people.
What they’re saying: Hobbs says Author sees MA as the company's first chapter, and plans for the company to offer its services across other types of insurance, including beyond Medicare.
The backstory: General Atlantic managing director Robb Vorhoff says the firm spent one to two years evaluating the thesis behind Author, then recruited a team to bring the plot to life — similar to the approach it took with OneOncology in 2018 and Alignment Healthcare in 2014.
- "We wanted to scale this in a different way from the traditional venture route, which usually starts with a small raise and another again in six months or so," says Vorhoff.
- "The advantage of this is that an entrepreneur didn't bring it to us — we did the research and then went out and recruited a team," he adds.
Reality check: Author's model relies on geriatric psychiatrists, of which there is currently just one for every 23,000 older U.S. adults. With the shortage expected to worsen in coming years, recruitment could be a challenge for companies like Author.
- A 2022 provider survey from the American Psychological Association found that 60% of psychologists were reporting no openings for new patients, and more than 40% were carrying waitlists of 10+ patients.
- Also, nearly half of the providers said they agreed or strongly agreed that they felt burned out.
Yes, but: Hobbs says Author's team-based model helps streamline operations so clinicians can serve more people more efficiently.
State of play: VCs have flocked to many elder-focused care companies, but most are focused on primary care, social support, or benefits navigation, not on mental illness.
- One exception is Rippl Care, a dementia-focused startup that launched last fall with $32 million in seed funding.
- Meanwhile, senior benefits navigation startup Duos in June raised $10 million in undesignated funds following a $15 million Series A last spring.
- Lifespark, a tech-powered startup looking to reinvent senior care, was seeking $50 million in growth equity funding, sources told Axios last fall.
- Senior insurance navigation platform Fair Square Medicare last summer garnered $15 million in Series A capital.
📚 One fun thing: Author's name is an homage to the role the company hopes to play in helping users assert agency in writing the next chapter of their health care story.
- "You are the author of your story," says Hobbs. "Your story is open, right? It may look one way today, but together we can write yet another chapter."