Talk about a convenient society. Try 1-800-I-NEED-A-THERAPIST-NOW.
60-second business plan
THE PITCH: It doesn't take a crystal ball to see a potentially lucrative future in combating unhappiness. Consider the Psychic Friends Network: with better management, Dionne Warwick's infomercial-fueled phenomenon likely could have maintained its peak revenues of $125 million. Now Ralph Musicant, CEO of My Therapy Network LLC (MTN), a national phone-therapy business based in Chicago, believes he has something even better than psychics.
Gross revenues for mental-health treatment in the United States are some $80 billion a year. A significant segment of that goes to therapists with an alphabet soup of degrees who administer to the "worried well" -- people dealing with problems like bereavement, stress, or marital conflict. They make up Musicant's target market -- along with those who have eschewed therapy because they don't want to wait for an appointment, are scared off by the stigma, or don't wish to pay for a full session when a 10-minute pep talk will do. It's a population, says the CEO, that's poorly served by managed care, which caters to the sick.
So far, the service, which launched January 8, has contracts with more than 500 licensed and insured therapists who are ready -- at varying, prescheduled times -- to lend an ear, and it plans to add another 5,500 practitioners in the next year. Customers, who enroll either online or by calling MTN's toll-free number, are given a 10-digit access code and a 4-digit security PIN to ensure confidentiality. At the beginning of each call, they're prompted to choose a therapist by gender and by language -- and even by name if they're regulars. Charging $3.95 a minute, billable to the caller's credit card, MTN expects to generate a net profit of approximately $1 a minute after deducting direct costs as well as administrative and marketing costs.
DIAL "M" FOR MENTAL HEALTH: Ralph Musicant wants to bring phone therapy to the "worried well."
To conserve cash, Musicant devised a partnership program with key vendors -- including a call center, a public-relations firm, an advertising agency, a Web-development company, and an accounting firm. In return for equity and cash payment of out-of-pocket expenses, MTN vendors let their fees for service accrue until Musicant's cash flow can cover them. "It was very important to me that every vendor have a proprietary interest in what we were doing," says Musicant, 53, whose management team of seven includes M.B.A.'s, psychologists, and psychiatrists.
Musicant says his business plan is still subject to revision, but in the plan he provided to Inc, he projected that he had to spend a significant sum on television and radio advertising to impress MTN on the public psyche.
To pay for those ads, Musicant is looking for investors, who in turn would receive equity. If the investor were to be a pharmaceutical company, the plan notes, it would also get cards with prepaid minutes for MTN's services, to be handed out with prescriptions for antidepressants. And if it were to be a managed-care company, the company's members would get MTN's services at a nominal rate.
Editor's note: Some specifics of Musicant's plan, particularly those involving partnerships with pharmaceutical companies and discounts for managed-care clients, were being reconsidered at press time.
The Quick Once-Over
Formal Projections: $24 million in sales, $6 million in net profit in 2002; $47 million in sales, $12 million in net profit in 2003; $71 million in sales, $18 million in net profit in 2004; $95 million in sales, $24 million in net profit in 2005
Total Capital Raised: $200,000 from two investors and personal savings
Biggest Expenses: Call-center-software development ($400,000) and call-center maintenance ($10,000 a month)
Accrued Expenses: $1 million (call center, public relations, Web-site development, advertising)
Founder's Salary: None so far
Outta Sight or Out of Mind?
WHO: Douglas E. Goldstein
TITLE: Author of eHealthcare: Harness the Power of Internet e-Commerce and e-Care (Aspen), president of the consulting and product-development company eHealthcare.net and cofounder of Consumer Health Services, a physician-information and appointment-management service.
"There's a tremendous need for mental-health services to be delivered through the phone or the Web, but there are also significant barriers to the use of such services. Because there's a stigma associated with mental-health problems, MTN will likely face huge costs for retail brand-building and advertising.
"MTN is significantly underfunded and operating in a pure burn-rate mode. The bootstrapping approach with vendors will likely backfire in the short run, as various partners' patience will wear thin if capital acquisition ends up taking much longer than projected. Venture capitalists seem unlikely to touch the deal because of the lack of profitability and the fact that MTN as described doesn't leverage an existing set of customer relationships. The strategy of obtaining corporate partners and corporate customers to make a seed investment is possible but not likely. Based on the business plan that I reviewed, MTN doesn't show any proven patient satisfaction or any clinical research to support that it lowers health-care costs, improves outcomes, or achieves other key mental-health goals.
"A phone-only distribution model also has disadvantages. MTN would have a much higher probability of success if it leveraged existing revenue-generating mental-health networks in major cities. The MTN phone-therapy service could serve as an extension of the base mental-health business of each network. In fact, MTN should consider much more of a B2B model, whereby it would deliver the technology and systems for expanded phone- and cyber-franchises of traditional mental-health providers. This would be a mostly private-label effort positioned as 'MTN Inside' or 'Powered by MTN.' Such an integration of phone services with face-to-face visits and the Web would be very compelling to customers and investors."
WHO: Marilynne Rosen
TITLE: President and CEO of Epotec Inc., a software-development company that creates Web-based interactive programs focused on behaviorial change and skill building for health-care, pharmaceutical, and human-resources organizations. She's a licensed clinical psychologist.
"There's no question that the stigma attached to behavioral health disorders and other barriers to care leave many people without help. MTN's concept is an interesting approach to this problem, and the company has assembled an impressive management team to carry it out. However, I have a number of concerns about the business plan that I reviewed. At $3.95 a minute, MTN's service is expensive -- it costs significantly more than most face-to-face counseling sessions. Callers are likely to take more than a few minutes to describe their problems, and reaching resolution will take even more time. The business plan offers no evidence that consumers will pay a steep price, or any price at all, for fee-for-service telephone counseling.
"Moreover, MTN is being unrealistic about the speed at which it expects the service to be adopted. Even with the backing of a major player, building market credibility for an unfamiliar service is likely to be painstaking rather than explosive.
"Finally, MTN is staking its viability on a somewhat flawed industry analysis. The barriers to behavioral health care that the business plan cites -- the requirement to obtain a primary-care referral for counseling services and the use of capitation to pay for them -- are far from universal, offering a much narrower window of opportunity for MTN to exploit than it suggests. Furthermore, for MTN's target market -- those who can afford to pay for counseling services out of pocket -- those arguments are irrelevant. Given the uphill revenue battle faced by many B2C companies and the niche that MTN is trying to fill, it is unlikely that the company will achieve the utilization and profitability it projects in its business plan."
In the Line of Pliers
The Bucks Stop Here
60-Second Business Plan
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