Road to Next: Mental Health and Wellbeing Industry

By Heather Gates, Managing Director, Audit & Assurance Private Growth Leader, Deloitte & Touche LLP and Amy Smith, US Well-being Leader, Deloitte Services LP

Talking points

• The mental health and wellbeing industry continues to grow as part of the overall digital health movement.
• Investment is impacted by changing technology, regulatory uncertainty, and investor trends and preferences.
• Deloitte’s latest Road to Next report shines a spotlight on capital infusion into this space.

What is the mental health and wellbeing industry?

If you hadn’t heard of mental health and wellbeing five years ago, you likely have now. The COVID-19 pandemic brought the concept out of the shadows and into the spotlight for individuals, companies, investors, and the medical community.

For investors, MHW is divided into two main areas: prevention and treatment. Products and services can address both, such as telehealth and electronic health records systems, or they can target a specific area, as with medication and wearables. Demand for these solutions is strong and continues to grow: $10 billion has been invested in MHW companies since 2020.¹

So why are we talking more about the value of mental health and wellbeing now? Even before 2020, this issue was fast becoming a prominent concern in business circles. Increased social awareness and a focus on diversity, equity, and inclusion (DEI) initiatives has led corporations to rethink their core values and contributions to society. Add in the physical and social isolation resulting from the pandemic, and mental health has emerged as a defining corporate issue of the decade.

A market in flux

Not surprisingly, this nascent market is experiencing some growing pains. As part of the overall digital health movement, investors in the MHW sector can expect to encounter certain legal and corporate issues.

• Regulatory environment: MHW addresses privacy, medical, and other issues that imply stringent regulation and increased confidentiality concerns. In many cases, state and national regulations are inconsistent or add additional hurdles for interstate commerce.
• Expertise: Historically, many investors have specialized in a particular field, such as biotech or fintech. MHW products and services often fall somewhere in between, however, so they may not fit into the traditional categories familiar to investors.
• Market segments: Despite the size of the market for MHW solutions, some investors may not be comfortable with investments that target underserved, undefined, or uncertain markets.

And yet, these challenges also mean opportunities. The market is there: in fact, more than 20 percent of US adults live with a mental, behavioral, or emotional disorder.² Interested investors should consider how to hedge those risks while capitalizing on this rapidly developing industry.

What’s coming in MHW investing

So, what do we think we’ll see in the near future for this growing market? An expansion of current technologies and trends, with an eye on user experience.

• Consolidation: In the MHW space, individual companies have historically innovated to address one-off issues. As the industry matures, we can expect to see these businesses combine to develop more comprehensive platforms that offer easier access.
• Diversity: Telehealth and a focus on underserved groups will continue to expand services to additional markets.
• Data, artificial intelligence (AI), and research: The massive amount of data available from wearable devices and other technology could allow companies to offer recommendations and insights that go far beyond their current capabilities.
• Personalization: Next-generation electronic health records and the widespread digital transformation of medicine will offer personalization in medical prevention, diagnosis, treatment, and control.

Lessons from Deloitte’s MHW journey

At Deloitte, we’re no strangers to the MHW space. Since 2015, we’ve had a dedicated US Well-Being Leader.³ Currently, we see a parallel between our own experience and the state of the sector.

As we aim for personalization, we must balance the need for privacy with the desire for useful information. How can we truly take the pulse of the employee pool while keeping individual data confidential? Even productivity apps can raise a red flag as we debate how to track employee data without seeming like we’re tracking employees.

And then there’s risk. How sustainable is it to ask employees to share their mental health challenges, even on an aggregate level? In addition to potential legal concerns, intimate involvement could impact relationships with fellow employees and supervisors.

Each of these challenges offers an opportunity for an innovative company with the right solution.

What role can Deloitte play?

Interested in opportunities in the mental health and wellbeing industry? Road to Next, Deloitte’s quarterly report on emerging investment trends in private financial markets and the venture capital ecosystem, takes a deep dive. We understand the MHW space and can provide strategic guidance.