It's Time for Therapists to Wake Up

12.08.21 10:09 AM By Provider First

Why is nobody sharing the value?

As I look around at all these “uber of” companies, I’m struck by just how much market value is being created.  It makes sense on one hand - you’re aggregating or rolling up what has been a very fragmented market so far.  There’s benefits that come with that, both to the economics of the business as you move from billing for 1 person to 1,000 people as well as customer experience benefits that come from taking a thousand disparate paper processes and replacing them with well-designed mobile-first experiences.  There’s also power that accrues to these organizations, Amazon being the best example.  They have aggregated almost 10 million sellers on one side and with it gained an immense amount of data. On the other side, they have built a huge consumer brand that everyone recognizes. 

The venture capital world has realized this and is plowing billions, or maybe at this point it's Trillions with a "T”, of dollars into startups trying to make the same play in other industries.  If Amazon was the original aggregator, then Zillow is probably the second, Uber is the third generation and as I look at the healthcare space, I see a burgeonging fourth generation. 

In nursing there are nurse aggregators such as Nurse Dash, Medely, and Clipboard health building networks of per diem and travel nurses.  Dr. On Demand and Teladoc are building networks of Doctors.  In the mental healthcare space, companies like Lifestance, Lyra, Quartet, Headway, Alma and now SonderMind are doing the same.

Picking out one of those, Lifestance, let’s look at the numbers to understand just how much “value” is being created.  Lifestance just held their first public earnings call and from that we learned that they have 3,300 providers nationwide.  At the time of their IPO they were valued at roughly 7.5 Billion, although that has recently dropped to 5 Billion.  That means that the market values each provider in their network at somewhere between $1,500,000 and $2,200,000.  Average the two together and you’re getting a value of roughly $1.85 Million dollars per provider. 

I want to let that hit home for a moment.  

The market values EACH provider at roughly $1.85 MILLION DOLLARS. 

Yet, those companies are paying each provider ~$70 to $100 per session and sharing NONE of that market value with the providers themselves.  Zip.  Zilch. Zero. 

My question is - when are the providers going to wake up and realize that they’re being taken advantage of?  That these people are building billion dollar companies on their backs and NOT sharing any of the profits? 

If you’re a provider reading this, what could you do with a million dollars?  Could you make more impact than them?  Because that’s how they’re “getting you” is that they’re claiming some large, altruistic mission like “increasing access to care” or donating $10 million dollars (of a total of $720 million!) toward a non-profit and claiming that they’re all about the social good.   In reality, they are quite literally making millions of dollars off of your work and not sharing any of it with you.

Still not convinced?  Let’s do some math. The founder of Lifestance owns 6% of the company according to publicly available documents. If the company is worth $5B, then that means his shares are worth approximately $300 Million. 

I want to pause here and make sure you understand that these people are literally worth hundreds of millions of dollars.  

How much did they share with you? 1%?  10%?  Any of it at all? 

Nope. None.

If you ever get sick of being taken advantage of, then please know that there is an alternative.  At GoodPlace we share the profits and are going to share the equity, too.
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