Digital behavioral health has emerged as one of the most promising solutions to the nation’s growing mental health crisis. By leveraging telehealth platforms and digital-first care models, operators can improve access to care, overcome geographic barriers, and address the shortage of local providers. Yet despite the promise of these platforms, a major challenge threatens their sustainability: high telehealth patient acquisition costs.
Last year alone, investors poured $5.5 billion into digital behavioral health operators, signaling strong confidence in the sector’s potential. However, many of the largest players, including Teladoc Health Inc. (NYSE: TDOC) and Talkspace Inc. (Nasdaq: TALK), continue to struggle with the financial burden of acquiring new customers. The rapid expansion of digital health companies in recent years, fueled by venture capital investment, has only intensified this challenge.
Jason Gorevic, CEO of Teladoc Health, pointed to well-funded private competitors as a key driver of elevated telehealth patient acquisition costs. During the company’s Q1 earnings call, he said, “We strongly attribute [higher customer acquisition costs] to smaller private competitors who have been recently well funded with a rash of venture capital money flowing into that space and making what we would consider to be economically irrational decisions.”
The Pandemic’s Impact on Behavioral Health
The urgency for digital behavioral health solutions has only grown in the wake of the COVID-19 pandemic. Studies from the University of Chicago and Boston University revealed that the prevalence of depressive symptoms among Americans tripled in 2020 compared to 2019, with the rate rising further from 27.8% in 2020 to 32.8% in 2021. At the same time, overdose deaths have skyrocketed, surpassing 109,000 in the 12-month period ending March 2025.
The pandemic has heightened awareness of the critical need for scalable behavioral health solutions, yet the sector still faces the challenge of building sustainable, profitable business models. Phillip Schermer, CEO of Project Healthy Minds, cautions, “Just lighting a lot of marketing dollars on fire and hoping that in a decade you’ll figure out your business model isn’t really a durable business.” This warning applies directly to telehealth patient acquisition strategies that rely heavily on paid marketing without community engagement.
Community Connections: The Hidden Advantage
Traditional, facility-based behavioral health operators often benefit from deep community ties that reduce marketing costs. Nick Jaworski, CEO of the behavioral health-focused marketing firm Circle Social Inc., explains that reputation and word-of-mouth communication within a community create what he calls “invisible marketing.” These cumulative community conversations allow local providers to attract patients more efficiently than national digital-first operators can, reducing telehealth patient acquisition costs naturally.
Jaworski cites a client in the Seattle metro area that now conducts nearly 90% of its visits via telehealth. Pre-pandemic, this client operated only in brick-and-mortar facilities. Because the practice was already deeply embedded in the community and had built a strong reputation, its transition to telehealth preserved its advantage. “The national players aren’t doing that. They’re trying to be everywhere all across the board. They can’t build that reputation very well,” Jaworski said. Without local reputation, digital behavioral health operators often must spend heavily on marketing to reach new patients, increasing telehealth patient acquisition costs.
Marketing Expenses Highlight the Gap
Marketing expenses underscore the challenge of scaling digital behavioral health. Talkspace, for example, spent $100.6 million on sales and marketing in 2021—63% of its total expenses. Teladoc Health reported $416.7 million in marketing and advertising costs, or 18.1% of total expenses, much of it tied to its mental health subsidiary BetterHelp.
By contrast, facility-based operators often rely on community relationships and organic referrals rather than costly digital advertising. LifeStance Health Groups Inc. (Nasdaq: LFST) spent just $11.7 million on marketing in 2021—approximately 1.2% of total expenses—leveraging health plan partnerships, referring providers, and online self-referrals. Michael Lester, LifeStance’s founding CEO, noted, “We are not and never have been dependent on direct-to-consumer paid marketing.”
Some large operators, like Acadia Healthcare (Nasdaq: ACHC) and Universal Health Services (NYSE: UHS), do not publicly report marketing expenses, though UHS has more patients than it can accommodate, suggesting strong organic demand. UHS CFO Steve Filton has indicated that patient demand exceeds capacity, allowing the company to leverage payer negotiations without heavy marketing. Efficiently managing telehealth patient acquisition remains less of a concern for these large facility-based operators.
Brick-and-Mortar Providers and Community Reputation
Brick-and-mortar providers like Quince Orchard Psychotherapy illustrate how community-centered growth can keep telehealth patient acquisition costs low. Founded in 2015 in Rockville, Maryland, the practice has expanded to 40 providers with annual revenue of $7 million, largely through insurance networks and word-of-mouth referrals. “If we were not taking insurance, I think it would be a different story because people have a lot more options,” founder Carrie Singer said.
However, traditional models also face limits. Staffing shortages, local provider deficits, and geographic disparities mean that some communities remain underserved. HRSA data from 2016 indicated that the Northeast had a surplus of mental health counselors, while the Midwest, South, and West had deficits that are projected to deepen by 2030. Digital behavioral health platforms can mitigate these inequities by lowering telehealth patient acquisition costs while reaching patients in underserved regions.
Digital Behavioral Health: Scaling Beyond Local Limits
Digital behavioral health platforms can connect patients with providers across state lines, addressing inequitable distribution and facilitating more convenient access to care. Singer notes, “That’s how these digital health companies do it — they aggregate these segmented markets to make it easy to have just one place to search.”
Yet this scalability comes with costs. Without local reputation or embedded community networks, digital operators often must rely on expensive marketing campaigns, which drives up telehealth patient acquisition costs. Jason Gorevic of Teladoc has cited well-funded competitors as a factor in inflating these costs, while Talkspace is actively working to rein in marketing spend to improve profitability.
Toward Sustainable Models
The future of digital behavioral health depends on balancing growth, marketing efficiency, and community engagement. Operators must find ways to reduce telehealth patient acquisition costs without compromising access, quality, or patient outcomes. Building a durable business model requires more than spending on digital ads—it requires leveraging partnerships, fostering reputation, and innovating care delivery in ways that are sustainable over the long term.
The promise of digital behavioral health remains clear: improved access, better distribution of providers, and faster pathways to care. The challenge is ensuring that growth is sustainable, cost-effective, and aligned with community needs. Companies that master the delicate balance of telehealth patient acquisition efficiency and high-quality care will define the next era of behavioral health innovation.
