A Troubling Trend
Today’s topic is a bit of a downer, but it’s a problem we, as a society need to address. Death rates have been significantly increased by COVID. The less reported story is the increase in what specialists call “deaths of despair”. These include suicide, drug and alcohol poisoning, and alcoholic liver disease. The chart below illustrates the upward tick since 2000 in these sorts of deaths. The chart notably does not include 2020 but one can certainly imagine the impact of the pandemic on substance abuse, and rates of depression – which plays a role in over half of suicide attempts.
Younger Cohort Self Reports More Depressive Episodes
The younger cohorts (ages 16 – 25) in our population are much more likely to report a major depressive episode. Generation Z is also the largest cohort within our population. It’s possible that older cohorts still experience these major depressive episodes, but they face more social barriers to admitting a problem and self-reporting it in a survey. The percentage increase in the number of people in these younger cohorts to report a depressive episode also stands out. They are struggling to feel okay – and that’s obviously a problem that affects all of us.
Simple, But Not Easy
Therapy works, but perception is key. Boomers are ashamed of going to therapy or see it as a temporary solution (one and done). In reality it is much more like a gym membership. If you take it seriously over time you can thrive. On the other hand, if you go right before summer for 4 weeks every year, you may make it through the year but you will fail to address the core problem(s).
Tailwinds – Government Support
What happens to a nation (developed or emerging?) that suffers from a rise in these deaths of despair? They lose loved ones and it hurts the economy too. There are no winners. The politicians and regulators have a natural incentive and a practical incentive to reduce the instance of these deaths. We’ve seen it with masks and alcohol recently, but seatbelts and tobacco show what the government can do to combat these types of real problems.
As a business, that means therapy, therapy platforms or therapy alternatives will be receiving free marketing from a practically unlimited government budget.
Tailwinds – Employers
Some businesses (ecommerce stands out) have been enriched by pandemic spending as billions of people changed their lives to accommodate much more time at home. That means employees of ecommerce companies are wrestling with work-life balance. A survey reported by the Anxiety and Depression Association of America shows 56% of employees say stress and anxiety impacts their workplace performance. There’s a business case to be made for investing in therapy for employees to alleviate this day-to-day stress. There’s also a strong case to be made for investing in therapy for employees to drive higher retention and long-term profitability.
Tailwinds – COVID Trauma
COVID opened a sort of positive pandora’s box here. It pushed millions of people into thinking actively about how to take care of their mental health. For a service that struggled with public perception (oh you go to therapy – what’s wrong with you?), this could be an inflection point. We’re already seeing a spike in mental health spending. In 2019, spending on mental health was $225B in the US. That’s up 52% from 2009. 2020 only drove this spending higher.
There are scalable solutions we can create here to automate parts of talk therapy and prescription administration. If it seems simple to automate parts of the traditionally manual worlds of talk therapy and prescription drug administration, good.
It is simple. Calm and Headspace are both apps that offer guided meditations to users. Both are valued at over one billion dollars. You can make many arguments as to why people around the world are clamouring to spend their money on apps that deliver some semblance of relaxation. What I want to draw your attention to is the fact that almost any root cause driving user growth for these (and other) meditation apps is also going to drive further steps into supporting one’s mental health.
That is, I think meditation apps can be seen as an intermediary step between no health intervention for someone who is struggling and some intervention. When they experience some reduction in their struggle the value case is cemented for them. Then when they realize meditation cannot solve all problems, they are more likely to book that first session with a therapist or counselor.
If you position your portfolio to benefit from this trend in the coming years, I expect you’ll do well.
Thank You For Your Loyal Readership
The Financial Star team.