In 2023, Teladoc Health’s direct-to-consumer mental health subsidiary, BetterHelp, refunded a staggering $93 million to its consumers. This amount represents about 8% of BetterHelp’s revenue, according to Teladoc’s public SEC filings. Compared to 2022, the refund total increased by 15%, raising important questions and conversations around telehealth mental health refunds in the growing digital therapy space.
BetterHelp operates as a subscription-based telehealth platform providing mental health services through a network of over 40,000 clinicians. As a service that offers monthly subscriptions, refunds become an important part of the customer experience. A BetterHelp spokesperson told Behavioral Health Business, “Refunds may be offered for any number of reasons if a member decides BetterHelp is not right for them.” They also emphasized that the refund percentage has remained consistent relative to revenue over the past several years, showing the company’s ongoing commitment to handling telehealth mental health refunds in a transparent way.
Refunds Are Unique to BetterHelp’s Business Model
However, Teladoc’s annual report clarifies that these refunds are unique to BetterHelp’s business model. Teladoc’s other services, such as their B2B-focused Health Integrated Care, typically do not issue refunds for services performed. BetterHelp’s FAQ states, “Refunds are offered on a case-by-case basis and may require meeting specific criteria.” This individualized refund process aligns with common practices in subscription services, but also underscores the complexities in managing telehealth mental health refunds effectively.
Industry Perspective on Telehealth Mental Health Refunds
Industry experts weigh in on the significance of these refund rates. Shivan Bhavnani, founder of the Global Institute of Mental and Brain Health Investment, estimates that a refund rate around 7-8% is typical for subscription-based digital services. He explains that cancellations mid-month often result in prorated refunds, a standard practice many users expect. He also notes that “if users cannot schedule appointments due to lack of availability, they typically receive full refunds,” a critical factor in discussions about telehealth mental health refunds.
In contrast to the sizeable refund figures disclosed by BetterHelp, comparable companies like Talkspace mention refunds in filings but do not specify amounts. Talkspace’s 2022 filings state customers receive prorated refunds upon subscription cancellations, reflecting similar consumer protections around telehealth mental health refunds but without detailed disclosure.
Other digital health companies like Hims & Hers and 23andMe also account for refunds in their public filings but classify the amounts as immaterial or undisclosed. By comparison, the e-commerce industry sees an average return rate of about 16.5%, indicating that BetterHelp’s refund rate, while high in dollar value, aligns with industry standards for consumer-driven services, especially in the telehealth mental health refunds context.
BetterHelp’s Revenue and Refunds
BetterHelp’s revenues mostly come from monthly subscriptions providing access to mental health clinicians and supplemental services like the BetterSleep app. In 2023, BetterHelp generated about $1.1 billion in revenue, which is roughly 44% of Teladoc’s total revenue. The company also collaborates with employee assistance programs, where billing occurs per visit. Given the scale of BetterHelp’s operations, the $93 million in refunds reflects both the challenges and the company’s efforts to maintain customer satisfaction amid rapid growth.
Akshaya Srivatsa, CEO of Care Better, points out that such a refund amount signals a dedication to ethical business practices and customer satisfaction. “While $93 million in refunds might initially raise eyebrows,” Srivatsa said, “it demonstrates the company’s willingness to address dissatisfaction promptly and ethically, which is crucial in the competitive telehealth space.”
A Critical Look at Refunds in Telehealth
Still, some experts caution consumers and industry watchers to view telehealth mental health refunds critically. Jonathan Rosenfeld, a managing attorney specializing in injury law, suggests that significant refund volumes may indicate underlying service issues affecting patient care. He urges the public to consider the broader implications of these refunds for telehealth service quality, regulatory compliance, and access to mental healthcare.
BetterHelp has experienced slowed growth in recent months, partly due to regulatory scrutiny and public concerns over privacy practices. Last year, it settled with the Federal Trade Commission and agreed to keep detailed records of refund requests, reflecting heightened oversight around telehealth mental health refunds and consumer protections.
Market Trends and Financial Outlook
In 2023, BetterHelp’s revenue increased by 11% to $1.13 billion, but the company expects its business size to remain stable or slightly shrink in 2024. According to Teladoc CEO Jason Gorevic, BetterHelp’s growth has been “gated” by marketing spend limitations, as the company pulled back on advertising in late 2023 after seeing diminishing returns. Marketing costs for Teladoc Health overall reached about $689 million in 2023, highlighting the high stakes involved in acquiring and retaining telehealth customers—and the role refunds play in that dynamic.
Conclusion: The Role of Refunds in Telehealth Mental Health Services
To summarize, the $93 million BetterHelp refunded in 2023 shines a spotlight on the realities of telehealth mental health refunds in the subscription therapy market. While refunds are a normal part of consumer services, their scale also calls for ongoing scrutiny into service quality, access, and business ethics in telehealth. As digital mental health platforms continue to evolve, understanding the nuances behind refund policies and practices remains essential for consumers and industry observers alike.
