How to Use the W.E.L.L. Framework to Evaluate Digital Mental Health Solutions

Free guide to startup business evaluation for clinicians

Digital mental health services are on the rise, and it's no doubt you've been approached with a possible partnership or opportunity. Digital mental health startups offer an enticing promise when it comes to addressing mental health challenges: solutions that scale. As a clinician, this could mean the opportunity to both expand your impact and uplevel your career. But many clinicians find themselves daunted by the startup world and unsure where to start when it comes to figuring out whether the opportunity to support a digital mental health service is worth it.

I believe that truly understanding startup business fundamentals is the only way for clinicians to gain a stronger voice. As an empowered clinician, you can influence digital health startups to operate with an unwavering focus on patient care in addition to their bottom line. Your perspective can drive innovation that truly benefits patients.

Mastering business fundamentals takes time and dedication, much like becoming a skilled clinician. Over the past ten years, I’ve honed my business acumen through my work with dozens of digital health and technology companies as an employee, executive, consultant, and advisor. As the founder of WELL and creator of the WELL Career Accelerator, I’m committed to empowering fellow clinicians on their journey to build fulfilling careers in the digital health industry. Because I believe startup clinicians need a true understanding of business fundamentals to succeed, I’ve created a tailor-made framework that will help you evaluate the business viability of digital mental health startups with confidence.

Use the W.E.L.L. framework to evaluate digital health solutions:

Let's imagine you're at a conference, surrounded by the buzz of enthusiastic startup pitches, each promising to revolutionize digital mental health care. It's thrilling, but amidst the excitement, you wonder, "How do I tell reality from hype? Are these truly good business ideas?" These 4 steps will give you the key information you need to know.

Step 1: W (What and Who)

What: What problem does this startup aim to solve? What is the unique value proposition they’re offering?

Nearly all problems in healthcare can be categorized as problems of access, cost, or quality. When you hear a startup’s problem statement, see if you can determine which category they’re targeting. Ideally, this will be obvious and the company will have a crisp, clear problem statement. If not…that’s a red flag!

Who: Who is the target customer?

At a high level, there are three major customer segments in healthcare: patients, providers, and payers. The customer is the person or entity that pays for the product or service. In digital health, the customer might be different from the end user. It’s important that the company is clear about who will pay for their product or service and why.

Step 2: E (Environment)

A successful startup understands the broader healthcare landscape. It can answer the questions:
  • Who are the company’s “friends”? In other words, who will benefit from the company’s existence?
  • Who are the company’s “foes”? Are there any powerful stakeholders that stand to lose from the company’s success?
When evaluating a potential company, familiarize yourself with the key players in the healthcare system. Has this company thoughtfully considered its position in the market? Is there a competitor who is already doing the exact same thing? Do they understand how their product or service supports an incumbent’s bottom line? A promising startup company understands the goals and financial incentives of hospitals, provider systems, payers, and employers. A startup should also be able to prove its desirability, meaning that it can show you data to support their claims that end users actually want this new thing.

Step 3: L (Lifetime Value)

For a health startup’s business model to be viable, it must have a path to profitability. All ventures boil down to unit economics: the cost of acquiring a customer (CAC) must be lower than the total lifetime value (LTV) that customer brings to the business.

The leading cost of startup death is realizing too late that LTV is too low and CAC is too high.

To assess a startup company’s unit economics and evaluate its likelihood of reaching profitability, ask specific questions:
  • What does it cost the company to get, keep, and grow its customer base?
  • How much does the company make per customer? What is the revenue model?
  • How big is the Total Addressable Market (TAM) for the company’s products or services?
  • What percentage of the TAM would the company need to win to break even?
The point is not for a startup company to be profitable from day one. But, the team should be able to articulate a logical plan to get to the “break even” point (where CAC = LTV) and beyond. And they should be realistic about the cost of doing business. If a company waves off concerns about customer acquisition costs, or makes it sound like acquiring end users will be a breeze…that’s another red flag!

Step 4: L (Legitimacy)

This part of the evaluation is probably the most intuitive as a clinician. To be successful, a healthcare company needs to be able to show that their solution works as they claim it does.

When evaluating a startup company’s evidence, consider the outcomes the company claims to deliver. Be sure to ask about:
  • Peer-reviewed clinical trial evidence
  • Real-world outcomes
  • Commercial pilot data
  • User research
  • Qualitative data

Dig deeper with W.E.L.L.

As clinicians, we have the unique opportunity to revolutionize mental healthcare by driving innovation and ensuring that patient care remains at the forefront. You can use the W.E.L.L. Framework to tell the promising startups from the ones that might not quite make the cut. Go deeper with the accompanying guide that will serve as your trusty guide when engaging with digital health startup founders and business stakeholders.

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Meet the Expert:
Clare Kennedy Purvis, PsyD, is ambitiously dedicated to creating a more sustainable and equitable healthcare system by empowering people with tools that support better health. She’s spent her career as a clinical psychologist building and scaling companies at the intersection of health and technology. As a startup executive and business leader, Clare has developed a deep understanding of the healthcare system, with an eye on how technology can positively transform the industry. She started her career running clinical product development and coaching at a mental health startup serving consumers, employers, health systems, and health plans before returning to Stanford to complete a fellowship in value-based healthcare design. There, Clare focused on the role of technology to scale delivery of team-based, high-value primary care. She then joined the executive leadership team at Headspace where she built the company’s applied behavioral science division, ran clinical research, established and led a digital therapeutics subsidiary business, and led the company’s strategic expansion into mental health care delivery. She has since served as Interim and Fractional Chief Product Officer at digital health startups including Mindcure and Violet, advises companies across the industry including Flo and Brightline, and consults on health product strategy at Google.

Her goal as the Founder of WELL is to use her expertise and relationships in the industry to help women clinicians and scientists effectively understand, penetrate and ultimately reshape the digital health industry as business leaders. Clare graduated Summa Cum Laude from the University of Wisconsin-Madison and holds MS and PsyD degrees from the PGSP-Stanford Consortium.

Topic: Business

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