Pelago secures $58M to expand virtual SUD clinic
The additional capital will help Pelago accelerate its product roadmap and advance clinical research efforts.
Photo: Kilito Chan/Getty Images
Pelago, a digital clinical partner to U.S. businesses and health plans for substance use management, announced $58 million in new funding that now brings total funding to $151 million, which will be used to expand offerings for payers and employers.
The additional capital will help Pelago accelerate its product roadmap, extend its continuum of care and advance clinical research efforts, the company said.
Existing investor Atomico doubled down to lead the Series C investment, with participation from existing investors Kinnevik AB, Octopus Ventures and Y Combinator, plus new investors Eight Roads and GreyMatter Capital.
As part of the latest funding round, Atomico Partner Laura Connell will join the Pelago board.
WHAT'S THE IMPACT?
Pelago is addressing the rising rates and costs of substance misuse through its 100% fees-at-risk model, and an internal claims analysis showed improved outcomes and ROI: The substance use management program reduced medical claims on an annual basis by $9,367 per participant, compared to a control group delivering three-fold ROI.
More than 80% of cost savings realized in the Pelago analysis were attributable to lower medical spend, with the remainder tied to lower behavioral health costs.
According to recent surveys from consulting firms Mercer and WTW, costs for workplace health plans in 2024 will jump more than 6%. Moreover, recent Centers for Disease Control and Prevention research has reported the annual minimum direct cost of substance use disorders (SUDs) at $15,640 per affected employee enrolled in employer-sponsored insurance, totaling more than $35 billion annually.
In nonspecialized SUD treatment settings, research shows up to 89% of adults with SUDs may go undetected, resulting in delays in treatment, relapse and increased costs. And for those that do receive SUD treatment in mental health settings, the treatment itself is not the specialized SUD treatment they need.
All the while, the consequences in terms of hidden financial and productivity impacts remain buried in medical claims and absenteeism, dramatically impacting a company's bottom line in the form of costly health problems, inpatient and outpatient care, poor utilization management and lower productivity.
THE LARGER TREND
In March the U.S. Department of Health and Human Services, through the Substance Abuse and Mental Health Services Administration (SAMHSA), introduced funding opportunities for grant programs addressing behavioral health to the tune of $39.4 million.
The grants were framed as part of a larger administration-wide push to address both the opioid epidemic and the country's mental health crisis – both pillars of President Biden's Unity Agenda.
The awards facilitate ongoing efforts to advance HHS' Overdose Prevention Strategy, which is focused on prevention, harm reduction, treatment and recovery. They also support the White House's mental health strategy, as well as the National Drug Control Strategy.
The Overdose Prevention Strategy is meant to advance the National Drug Control Strategy, which delivers on the call to action in President Biden's Unity Agenda for a whole-of-government approach to beat the overdose epidemic.
That isn't the first time HHS has allocated grant funding to programs geared toward addressing the opioid crisis. In September 2022, HHS awarded more than $1.6 billion in investments for communities throughout the country to address the addiction and overdose crisis, and in 2023 HHS and SAMHSA awarded almost $48 million in grants to combat multiple facets of substance misuse and the nation's opioid epidemic.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
