With an increasing demand for mental health services, one person wanted to change the therapy game. In 2017, CEO Alex Katz founded Two Chairs, a company that uses technology to match patients with the right therapist. 

With An Increasing Demand In Mental Health Services, This CEO Wants To Use Tech To Change the Therapy Game

Well, with increasing demand in mental health services, one person wanted to change the therapy game in 2017, our next guest founded two chairs, a company that uses technology to perfectly match patients with the right therapist. So joining me now is the founder and Ceo Alex Katz Alex. Thank you so much for joining us. Good to have you on the show here. And I see with this recent $72 million series, the funding round that your company has been able to acquire. How do you want to grow the business? Yeah, Kristen, thanks so much for having me. Our mindset right now is really, we've built a clinical model that's working exceptionally well. We see that because we're measuring the quality of care at every single session and we're reliably getting patients to the right outcomes that they deserve. Intentionally. We have approached growth in a way because we care so much about quality for our patients. But we're now in a place where that model is working. So with this new $72 million infusion of capital, we're ready to bring the futures clinical model to markets all across the country. How would a user or a patient interact with this. Yes. So most of our patients are seeing us in network for their health insurance. Um We work uh with Kaiser Permanente and with Aetna. Um which means that the care is affordable for our patients. Historically, that's been a real challenge in the mental health care industry. Um A patient journey journey typically begins with a referral either from uh their uh their health plan or their primary care provider, referring them to care at two chairs. They come to our website, they're able to get that first appointment booked within the next couple of days. And from there, the journey begins intentionally, we're not putting the onus on the patient to figure out what kind of care they need or the right type of therapist for them. Their first touch point with us is a therapist driven making consultation appointments. We've got a therapist holding their hand and walking them through their options for therapy, understanding their needs and preferences and ultimately handing a bunch of insight to our matchmaking algorithm that gets patients to exactly the right therapist for them. How important is that dynamic? Finding the right therapist for you? It's everything in therapy. Um It's intuitive, right? If you've ever been to therapy, you know, it's all about the relationship. And it turns out we now have decades of research that have very consistently shown the the relationship between the therapist ie the therapeutic alliance is actually by far the best predictor of outcomes and care. It's more predictive than the years of experience of the therapist or the specific type of therapy being used. And that's why we've spent the last seven years really obsessed with this question of how do you very reliably and predictably get a patient to exactly the right therapist and what are the costs to the consumer? Yeah. On the cost side, because the vast majority of our patients see us in network, they're typically responsible for just a co pay. Um That is, you know, anywhere from 10 bucks to 40 bucks, you know, a lot more affordable than seeing a typical therapist in a private practice setting. And for us, that's really important. Um Our mission is all about access to exceptional mental health care and we've been able to provide access to dramatically more people as we've gone in network with more health plans. Interesting. So in terms of expansion, Alex State Services better offerings, what exactly is on the table? Yeah, I think as we think about expansion, the, the primary dimension for us is the markets we serve. Um So today we've built um one of the larger outpatient mental health platforms in the country. Um But we're still just serving three states. We're active in California, Washington and Florida. Uh So we've got 47 states to go and we're going to expand all across the country in the years to come. But notably, we're not gonna do it all at once. Um We're, we're taking a different approach candidly than a lot of other players in digital health. Um We have found that by focusing on one market at a time, we can actually deliver on a much higher quality of care, we go deep in a market, we understand a community, we build a local clinical team that really reflects that community. And we have found again and again, that helps us keep the quality bar much higher. How does insurance factor into this? Yeah, so I I mentioned we're in network today with Kaiser Permanente and several of their markets and with Aetna on a national basis. Um So across our health plan partners, there are more than 20 million Americans across the country that are in network for our services. And the way this works is we are billing the patient a copay, like I said, that's typically a very affordable amount and that we're billing the health insurance company for the rest. Notably, in our partnerships with health plans. Part of why Kaiser Aetna and others find so much value in working with two chairs is the quality of care that we're able to provide. I talked already about matchmaking, getting patients to the right therapist. We're also measuring the quality of care at every single session. We know from research, measurement based care gets you to better outcomes in therapy. And it's therefore surprising that less than 20% of therapists in the country are measuring anything. That's something we're doing because of the technology we've built and the way that we train therapists and how to use that data, all of our therapists are W-2 employees, the vast majority are full time. So we're able to hand pick therapists that are talented, have great training and we can invest really deeply in training, coaching and performance management to make sure that we are holding ourselves accountable to a high quality bar and delivering on the right outcomes for our health plan partners. And ultimately our patients, I do want to ask you, Alex. I see, as we mentioned at the top raising $72 million in a series D round. Congratulations again on that. I have had a variety of guests who joined me that said it is kind of a tough VC market out there right now. Certainly with sticky inflation leading to higher interest rates, likely now, higher rates for impacting just the free flow of cash that's available and funding. I'd like you to share a bit more about your own journey on the funding path and what worked and what didn't work. Yeah, I think, you know, fundraising markets are more challenging right now. It's a bit of an understatement. It's tough out there for growth stage companies. And you know, I think what enabled us to break through is the fact that we've built a clinical model that is really different. We have found that digital health investors have gotten a lot more sophisticated over the last several years and have realized that in the long run, the models that win in health care are the ones providing exceptional quality of care to their patients and a great experience to their clinicians. That's the other side of the equation. And it's just as important. The other thing I'll note is we've been focused on unit economics and cash efficiency for many years during the boom times, it was kind of that growth at all cost mindset. And I think we knew eventually that would come to an end and it meant that we really didn't have to break our stride. We've continued to grow at a very consistent pace, roughly doubling annually. And I think that's something investors were looking for the right pace of growth combined with a very clear path to profitability. Interesting now, in terms of artificial intelligence and the very sensitive data that is being shared on your platforms. How do you ensure that there is protection for the patient and their data? Yeah, data privacy and security is paramount when it comes to health care and, and even more so when it comes to mental health care, it's something we take super seriously and it's why we haven't raced to adopt a lot of A I technology overnight. Um We're being really thoughtful about the places where A I can be beneficial to the therapist and to the patient. Um but we don't want to cut corners when it comes to regulatory issues, security issues, privacy issues and, and so on. And our perspective on A I and therapy is it will become a great compliment to the therapist. It may help a therapist get their notes done more quickly. It might help them find insight in the measurement based care data we're collecting from our patients, but I'm not sure it's ever going to replace the therapist themselves. The reason therapy works is that the relationship in the room between, between two human beings. It is such an emotionally driven thing. We're betting on therapists being the primary driver of mental health care for a very, very long time to come. And in terms of how long these relationships last with a therapist, what does a patient usually experience or what would your company recommend you as the CEO in terms of how long you would stick with a therapist? Yeah. Well, I should note, I'm, I'm not a clinician. Um And so typically my advice is work with your therapist or your physician on what makes sense for you. Um, what I can say is, you know, we see many, many thousands of patients every week. Um, it varies considerably. It varies based on the goals that a patient has for care and their specific clinical needs. Most typically, our patients are coming to us for 3 to 6 months and are able to see really significant symptom reduction and are able to graduate care, feeling much better. Of course, some folks come to the room with a higher complexity or higher acuity case and that usually results in a longer period for care. Um I will say that the approach we've taken is different than what is typical out there in the broader mental health industry. For many therapy is something you do for life. And while there's certainly benefit in that, we worry about access to care for the millions of people that really would benefit enormously from therapy and need it and are struggling to find that access. And that's why we try to take a balanced approach. We want to get our patients to exactly the right therapist for them, help them make progress and then graduate them so that we can open up that chair for others that are really in a lot of need. Alex Scott founder and ce of two chairs, Alex. Thank you.