Tag: health startups

Why the Lights Went Out At Lantern, And What We Can Learn From It

By Paddy Padmanabhan, founder and CEO, Damo Consulting, and author of “The Big Unlock

Paddy Padmanabhan
Paddy Padmanabhan

“We’re sad to say goodbye.”

That was the subject line of the message from Lantern, a behavioral health startup whose app and coaching services I had used for a while. Lantern’s letter stated it is shuttering its business on August 1, helpfully offering to continue the coaching services for a limited period and pointing to other resources for those who relied on its services for six years since it started. News reports say Lantern is laying off 25 employees after failing to find a buyer for the company.

Firstly, I want to say this to the folks at Lantern: I’m sad we have to say goodbye. Although I had ceased to use the app a while back, I had developed a relationship with my personal behavioral coach who checked in with me regularly to see how I was doing with my meditation practice, often prodding me with a gentle nudge when I missed reporting on my sessions. I had the benefit of several conversations with my coach who was helpful, understanding and skilled at her work. Despite my short relationship with Lantern, I felt a positive impact on my well-being through regular meditation and mindfulness.

I came to know about Lantern back in December 2016 when I shared a stage as a speaker at an industry event with one of their executives. Back then, behavioral health was getting recognized as a $280 billion problem, which I wrote about after the Senate Health Committee announced the Mental Health Reform Act. Behavioral health is a complicated and expensive issue in U.S healthcare, which consulting firm McKinsey estimated affected 20 percent of the U.S population and was significantly underfunded in terms of treatment infrastructure.

In late 2016, there were more than 200 behavioral health startups, all of whom were responding to a brewing mental health crisis, and a favorable legislative and funding environment. Lantern was one of the highly visible ones, raising $17 million in series A money from marquee names, such as UPMC, Stanford University and Mayfield Ventures. The opioid epidemic and the exacerbation of related mental health issues was about to explode into public consciousness. Health insurance companies, faced with increasing costs for mental health and substance abuse, had started taking an interest in these startups. High profile partnerships were announced, such as the one between Highmark BCBS and Quartet. For a while, behavioral health seemed like a sure shot.

So what went wrong?

I’m sure the folks at Lantern and their VCs are pondering the question hard. However, back when I wrote about it, the signs of trouble were already visible. The Lantern executive I met at the time indicated that the lack of a reimbursement model for behavioral health was a huge challenge for growth. In healthcare, as we know, following the money is a prerequisite for success. The Department of Health and Human Services (HHS) had thrown $44.5 million at the problem, a drop in the ocean relative to the size of the problem.

Even for those who had access to funding, finding and recruiting trained clinicians with experience in behavioral health was a massive challenge.

Many startups, looking to stay outside the purview of regulation, tried to sidestep the FDA and go straight to employers and consumers (an expensive mistake that many failed digital health startups have learned the hard way).

Eventually, these problems had to come to a head. Lantern’s sad demise, brought about by a lack of ability to scale, and a lack of interest from the same insurance companies who were bullish on the sector two years ago, tells us that a business model with no revenue model has limited chances of success.

Is behavioral health dead then? Perhaps not. Many new telehealth companies, such as Teladoc, now offer behavioral health services. The CMS’s new rule to boost telehealth payments could be a shot in the arm that revives the fortunes of struggling behavioral health startups.

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HIT Thought Leadership Highlight: Bobby Grajewski, Edison Nation Medical

Bobby Grajewski
Bobby Grajewski

Bobby Grajewski is president of Edison Nation Medical, a healthcare product and medical device incubator and online community for people that are passionate about healthcare innovation. Prior to joining Edison Nation Medical, Grajewski, a serial entrepreneur, co-founded two online companies (Heritage Handcrafted and eCollector) and spent five years in venture capital and private equity both in the middle market (J.H. Whitney Capital Partners & Kamylon Capital) and at larger LBO firms (Permira Advisers) investing in companies across numerous industries.

Grajewski holds a MBA from The Wharton School at the University of Pennsylvania, a MPA from Harvard Kennedy School, and a BA from Harvard University.

Here he discusses Edison Nation Medical, its importance, who it serves and how it came to be.

What is ENM? How did it begin and who are your partners? Please provide a little about the history, present and future goals. 

Edison Nation Medical is a medical device incubator and online community for people passionate about making a difference in healthcare. We provide a clear pathway for anyone—physicians, nurses, technicians, entrepreneurs, university tech transfer officers, small companies, and even patients and caregivers—to submit their medical product innovations for in-depth review and potential commercialization. Our business model is based on trust—trust between a person with a great healthcare invention and a company that gives a thorough and expert read to determine the value of the innovation. If an innovation has value, we find it, unlock it and get it to market in order to improve care, lower cost and increase access for the patient.

Edison Nation Medical was founded in 2012 as part of a collaboration between the prolific consumer product developer Edison Nation, and Carolinas HealthCare System, one of the nation’s leading public healthcare systems. Both valued innovation in healthcare, and desired to create a model whereby open innovation in healthcare could exist, outside the traditional pathways, that would foster new ideas to improve care and increase efficiencies in the healthcare ecosystem.

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