New York-based behavioral health startup Quartet Health capped off its Series D funding round with an additional $7.5 million and announced it’s tying up with insurer Cambia Health Plans to improve mental healthcare access to Cambia’s members in the Pacific Northwest, according to MedCity News. Quartet — which began its Series D round with a $60 million raise in June — leverages an AI-enabled platform to pinpoint docs’ patients in need of mental health services, quickly link them with mental health pros in Quartet’s network, and open the line of communication between primary care physicians and mental health providers, which could help docs better tailor treatment plans and circumvent costly unnecessary care.

Digital behavioral health startups have attracted significant investor attention in 2019 — and investor confidence could signal to entrenched healthcare that these startups could make worthy partners. US-based digital behavioral health upstarts snapped up $416 million in the first three quarters of 2019 — accounting for 8% of all digital health funding, per Rock Health. And investors are willing to bet bigger on these companies: The average deal size for behavioral health cos has swelled 73% from last year to reach $26 million. 

Digital health startups could be attractive partners for private health insurers in particular — which have come under fire for failing to provide sufficient mental healthcare coverage. Despite an intensifying mental health crisis that’s projected to place a $238 billion burden on the US in 2020 — up 33% from the $179 billion it cost the US in 2014 — private insurers are still scrimping on mental health coverage: For example, an appointment with a mental health professional is five times as likely to be out-of-network than a primary care visit — and thus, costlier for members, Forbes reports. Further, private insurance companies are paying about 14% less for mental healthcare than Medicare, per NPR — and they’ve landed in court for their skimpy coverage of behavioral health services, per Bloomberg. We think private payers should rethink their mental healthcare strategies, because if consumers are discontent with lackluster options from their insurer, they could jump ship to an insurer with more comprehensive coverage. And considering private insurers are on the hook for hospital reimbursements when members wind up in the ER for a mental health-related episode, we expect to see them increasingly link up with digital health firms leveraging tech to boost member connections with mental healthcare pros to help avoid costly trips to the ER.