How Talk Space has been revolutionizing the mental health industry

Talk Space has been changing the Mental Health industry via digital transformation, allowing patients to connect with licensed therapists in a cheaper and more convenient way

Technology has changed how most of the companies in the world operate, from mature industries such as Automotive and Mining, to Internet of Things and Virtual Reality. In the healthcare field, specifically, digitalization has severely impacted the Mental Health area: the percentage of American citizens with any mental health issue (e.g. anxiety, depression, behavioral and mood disorders, etc) has skyrocketed in the past years, reaching the alarming rate of 1 every 5 Americans. That´s over 40 million people.[i]

The issue is even more serious among youth, especially within women, where the percentage of young females with a major depression episode grew from 12.1% in 2011 to 19.5% In 2015.[ii]


This recent increase is explained by several different reasons:

  • Biological factors: genetics, prenatal damage, infection, disease and toxins
  • Substance abuse: abuse of cannabis, amphetamines, LSD and other drugs can cause multiple mental disorder
  • Social expectation and environmental factors: traumatic events, poor parenting, relationships, and self-esteem

Digitalization and access to information have increased our life expectations into unprecedented high levels. The growth of social networking, excessive internet use, sleep deprivation and multitasking lifestyles have all been putting us under intense pressure – and the impact is directly related to mental health disorders.

However, digitalization has opened the doors for new services to improve the field´s current inefficiencies (opportunities) as well. Labor utilization, service accessibility and cost optimization are some of the elements that start-ups across the world have been successfully addressing.

One of the companies that have been leading this change in the industry is Talk Space, by making therapy more available and affordable through the internet. The company has over 1,000 licensed therapists, who provide therapy via messaging and real-time sessions. Sessions can be held through their website or app-based.

Business Model

Talk Space differentiates itself from off-line providers mostly through technology. Its platform allows patients to have (1) anonymous sessions, (2) lower-cost treatment and (3) more accessibility through its unlimited messaging between patients and providers.[iii]

By being anonymous, Talk Space overcomes one of the biggest obstacles that prevents people from going to a therapist, reaching a broader audience that have never undergone therapy before because of the stigma and dishonor associated with that.

By providing a lower-cost treatment, not only new patients have started to use the service, but also the recurrence has increased. Additionally, by having an unlimited messaging package, patients are in constant contact with their psychologists, increasing service accessibility.

Operating Model

From 2012 to 2016 the company raised $28M and improved its service in several fronts: it developed Android and iOS applications, improved the quality of its providers, implemented marketing and public press initiatives, and implemented different price schemes.

On the anonymous side, the company has invested on developers and programmers to implement cryptography within its services. They have also partnered with Paypal and Payment gateways to have a smoother customer experience. The product is extremely user friendly and intuitive, making people feel less resistant to new technologies.

On cost, the model eliminates several off-line related costs: office rent, admin staff and utilities expenses. Also, as Talk Space is responsible for bringing new patients to the platform, demand tends to be higher, thus increasing the provider utilization time. Additionally, having text messages instead of live off-line sessions allows providers to take care of more patients at the same time, increasing the ratio patients/provider.

In regards to the service accessibility, its app-based version allows the patient to get in contact with his or her psychologist through messaging from anywhere, anytime, for only $128/month.

Additional opportunities:

1) Leverage on Medicaid

Currently Talk Space does not accept private insurance, Medicare nor Medicaid. Medicaid Mental Health spending, specifically, is predicted to increase from $61.1 billion to $67.4 billion with the impact of Obamacare in 2016.[iv]

In regards to Medicaid´s reimbursement to Telehealth, different types of services can be covered, depending on where (which state) the service was provided, which platform was used, and what types of professionals (social worker, counselors, psychologists or psychiatrist) provided the service.[v] In summary, there are several regions in which Talk Space could leverage on Medicaid but so far it has not been applied yet, either because of technology, scalability or research limitations. Still, it´s a huge opportunity for the company.

2) Different regions

There is a serious mental health workforce shortage in some states. Nationally, there´s one mental health provider for every 529 individuals, however, there´s a big variability between states. Texas, for instance, has 1 mental health provider for every 990 individuals, while in Massachusetts this rate is 1:200.[vi]

There is a huge opportunity for Talk Space to aim its marketing initiatives towards states such as Alabama, Texas, West Virginia and Georgia, where high demand and short supply make mental health costs relatively high, thus being a great space/opportunity for Talk Space services.


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Student comments on How Talk Space has been revolutionizing the mental health industry

  1. Thank you for addressing this extremely important issue. I love what Talk Space is doing to transform this industry. Increasing service accessibility and providing a way to immediately connect with someone is extremely important – but especially so for the mental health industry. Time is of the essence with mental health emergencies (1) – a few minutes could be the difference between life and death.
    I also love that these extremely important services have gone digital. As you mentioned, there is a mismatch between supply and demand – this mismatch is amplified even more when we are confined to one geography (where there may only be a few therapists). By offering services digitally, Talk Space has removed the geographic barrier and more people can be served.

    However, I am worried about a few things. Will people turn to Talk Space to replace real therapy? Can a few text messages with someone thousands of miles away really replace 1-hour long weekly in-person sessions? Can these professionals really diagnose you accurately from a few digital interactions? Furthermore, although Talk Space should be able to lower barriers and decrease stigma for seeking help, is this “digital help” enough? Other unintended consequences could be strengthening the stigma of seeking professional help and delaying effective treatment (2).

    I also think that security and encryption should be their #1 focus and area of investment. Given how important trust and privacy is to this business, I think one breach will ruin the business.

    All that said, I am very excited about this platform and to see how they continue to transform the industry.


  2. Thank you for surfacing this service and how it is radically evolving an industry that is challenged by stigma and patient trepidation to seek help. Especially as we support our classmates here at HBS, I think we can all agree that being aware of one’s mental health is of the utmost importance.

    I love the thoughtfulness of your next steps for Talkspace. Yet, I’d like to push the conversation a little further. We know that the latest election news might preclude Talkspace from leveraging government medical programs to their benefit. Instead, I would focus predominantly — as you have in your second recommendation — on growth in communities served, and additionally, on capturing long-term value from collecting in-app data analytics about patient habits, tendencies, and demographics.

    Let’s dig into the first suggestion: strategies for growth among underserved mental health communities. I wholeheartedly agree that targeted marketing in emerging state markets is valuable, but I would also supplement this targeted marketing with: 1) an educational marketing strategy about the importance of mental health, and 2) diversify the way new patients are able to interact with the platform. As of present, Talkspace provides one-to-one anonymous therapy; whereas, there are proven benefits to group therapy.[1] I would suggest Talkspace integrate a group therapy option into their feature set. The option of anonymously joining a group could give users — who exhibit the characteristic of discomfort approaching a mental health professional — a safe psychological space to bounce ideas off of others, learn from others’ experiences, and create a community around how they are feeling. Many people who face mental health issues daily feel isolated and as if they do not have someone to turn to. Group therapy has the potential to provide that supportive community.

    Secondly, I’d like to see Talkspace become a thought leader in the mental health space and refine their model for future users. They can do this by leveraging existing data gathered on the platform. This creates a positive feedback loop for the service: the more users who join, the more data can be gathered about various mental health issues, and the more insightful takeaways Talkspace can utilize in perfecting their app for users. Additionally, this data gives Talkspace the cache to speak within the broader academic universe on mental health to better how therapeutic professionals should best serve clients — now, from the customer perspective. This 180-degree data feedback is something that existing therapists do not have the luxury of seeing. This information could truly impact the quality of care both in the digital therapeutic space and offline.

    Again, really appreciated this post. So thoughtful and brought to the surface an issue many of us aren’t yet comfortable discussing. Thank you for that!


  3. Gustavo! I loved this post, and the step TalkSpace (simply by virtue of existing) takes to de-stigmatize conversations about mental health sicknesses.

    One area I am most curious about is accessibility. One of the biggest challenges to making moves in the mental health space is that it is an invisible infliction, and one that doesn’t have appropriate insurance reimbursements (a la co-pays for physical check-ups). Part of this relies on government aid. But part of this is dependent on companies surfacing resources to their employees. I wonder how TalkSpace can play a role in this effort.

    Second, what is the competition like in the “digitization of mental health” space? Namely, how is TalkSpace different, operationally, from apps like Headspace [1]?

    Finally, I am curious about the pricing model (i.e. the $128/month price point mentioned in your post) — how is this determined by TalkSpace? And how does one place a price on mental health aid?

    I sincerely appreciated the topic of this post, and am thrilled that entrepreneurs are finally taking steps to address / help with mental health problems.


    1. Anita’s comment about accessibility is spot on. At $128/month, Talk Space seems out of reach to low-income individuals, and this is precisely the population that is more likely to be exposed to the biological stresses, substance abuse, and environmental pressures that contribute to low mental health. We observe this disparity from the fact that social workers predominantly serve populations in poverty.[1] Talk Space is doing valuable work, but I wonder if a different business model is needed. I am aware of two alternatives:

      (1) Crisis Text Line – a text line that anonymously connects those in crisis situations with live peer counselors[2]

      (2) Lean On Me – a similar model to Crisis Text Line, but focused on university campuses such as MIT

      We are comparing apples to oranges in some ways because Talk Space is a for-profit, whereas the two above are non-profit. Nevertheless, the mere existence of these non-profit models raises the question of whether a service with the objective to serve those in such dire need can ever be a profit-maximizing entity. A modest fee makes sense; government subsidies make even more sense; I’m not sure that charging $128/month makes sense.


  4. As someone who has close personal relationships (e.g. my spouse) with mental health clinicians, I found this post to be fascinating and informative. I want to add some context about what it looks like to seek/receive mental health counselling in the traditional in-person model to point out a few areas that Talk Space has not figured out.

    In the US, clinicians are licensed state-by-state to practice. This creates a grey area for treating patients across state lines since it is unclear if a clinician sitting in their home in their licenced state is allowed to give virtual treatment across state lines. Furthermore, how does Talk Space deal with the aspect of liability? Clinicians need liability insurance to practice in case a high risk patient hurts or kills themselves and they get sued. To this point, clinicians usually use initial meetings to diagnose high risk patients and an on-going relationship to monitor for increasing risk factors that might signal a higher level of care (e.g. inpatient) is needed. Has Talk Space created channels for clinicians to recommend higher levels of care? Clinician guilt can run deep in the cases of patient suicide.[1] By anonymizing clients on Talk Space, I worry it could limit a clinicians ability to diagnose risky behaviors. Would it also limit clinician guilt if a patient injured or killed themselves, and if so, is that a good thing? Basically, I worry that Talk Space might provide a sub-standard level of care compared to traditional face-to-face therapy.

    When looking at the chart of increase in mental health episodes in youth, do you think perhaps de-stigmatization and a greater willingness to openly acknowledge one’s struggles might play a role in the trend? I personally feel that as a society we should focus on removing the stigma associated with admitting our mental health issues and the fact that we are seeking mental health counselling. For instance, I find it encouraging that the Mayor of Boston openly admits to his previous need for treatment for alcoholism.[2] While I love the idea of cutting costs for those who need therapy and enabling remote patients to get the treatment they need, I question the embrace of anonymous therapy. To me it seems like it will deliver substandard care while validating the patients stigmatization, both of which are not beneficial.


  5. Great post Gustavo! I think you hit on a few really key points that have been mentioned in the above posts as well. Medicaid, while an important opportunity, is something that physicians and mental health providers do not like to “accept” often because of low reimbursement rates. As you can tell, this is a major issue as the individuals who have Medicaid are among the most marginalized members in our society. For example, only 55% of psychiatrists accept insurance, and 46% of psychiatrists accept Medicaid [1]. This makes me wonder if rather than targeting Medicaid, they should partner with larger insurance providers or organizations that have the incentive to keep their population healthy at a low cost. Some names that come to mind are Kaiser and any organization in a value-sharing model (many in MA such as Partners Health). The ACA provides a lot of incentive for organizations to partner with potential startups such as Talkspace, but with the president elect threatening to repeal the ACA the future of these partnerships may be more uncertain.


  6. Thank you for this post Gustavo! As you know I am very passionate about the topic and love the company. I think to your points, there is still room to growth for TalkSpace. This is positive for the society and the company itself. To some of the comments to your blog post, I agree that talking to someone via texts or video will never fully give you the same experience as having an in person therapy. However, many people do not have access to therapy. This can be due to their financial situation but more importantly, because they do not want to admit they might have an issue. The hurdle to reach out to set an appointment with a physical psychotherapist is much larger than doing a quick (and cheap) appointment online. It is also much more anonymous. Unfortunately, many people still consider mental health as a sign of weakness so being able to be anonymous can play a big role in the value proposition of TalkSpace. Finally, finding a right therapist can take a long time. People often try at least 2-5 therapist before they settle to commit to regular therapy sessions – a key to getting healthy. TalkSpace reduces this hurdle somewhat as you can try 10 different therapist within a couple of hours.

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