The company, which raised $300 million at a $4.8 billion valuation this month, changed the status of more than 200 employees from salaried to hourly workers in August and made their health insurance contingent on quotas in 2022.
In October, online mental health startup Cerebral named Olympic gymnast Simone Biles as its chief impact officer. “I believe everyone should have access to mental health resources,” says a quote attributed to Biles on the company website.
But Cerebral’s messaging doesn’t square with how it treated certain employees, including many of the therapists integral to delivering care to its patients. In fact, the San Francisco, California-based company, which raised $300 million at a $4.8 billion valuation led by SoftBank Vision Fund 2 just last week, changed the contract status of more than 200 of its employees from salaried to hourly workers over the summer and switched eligibility for medical, vision and dental benefits to be contingent on hitting certain quotas.
“Cerebral’s whole mission, and they kept drilling it into us, is to provide accessible and affordable mental health,” said one current employee who asked for anonymity. “And it’s completely the opposite of that because of this decision.”
Cerebral cofounder and CEO Kyle Robertson called the move “a very difficult business decision” in an email to Forbes. “Ultimately, this was done so that our best and most productive therapists have the opportunity to earn more, and yes, that does also mean those less productive employees would earn less.” Robertson said 230 salaried clinicians “were adjusted” to the new model. Current and former employees suggested the number of people affected was likely higher since dozens of people quit shortly after. Robertson did not respond to a follow-up question asking to clarify the total number of people affected by the change including those who quit.
When Cerebral first launched in January 2020, it promised to offer affordable mental health services. Patients would pay cash for a monthly subscription to access a combination of therapy visits and medication. Rates range from $85 per month for virtual visits with an unlicensed care counselor to up to $325 per month for virtual visits with licensed therapists. The company recently started contracting with insurers, including Aetna, Blue Cross Blue Shield and Cigna, with in-network patients paying $29 per month. Robertson told Bloomberg Cerebral has cared for more than 200,000 patients over the past two years and currently employs more than 2,300 clinicians.
Starting off, Cerebral mostly hired clinical staff as contractors, which included therapists, care counselors, nurse practitioners, and psychiatrists. As the company rapidly scaled across all 50 states, it began offering full-time employment with benefits around March 2021 as part of a big push to hire more associate therapists, who require a supervising therapist to sign off on their clinical visits, as a way to meet demand.
“This was a bait and switch,” an employee wrote in a company Slack channel, according to a screenshot shared with Forbes.
On Monday, August 9, hundreds of employees received an invitation to a mandatory virtual staff meeting, according to seven current and former employees with knowledge of the event. COO Jessica Muse had been deputized to deliver the bad news to employees. She told them that rather than receiving a salary and benefits, these employees would now be paid per patient session. They were told the change would be effective immediately and that, as of August 31, they would no longer receive medical, dental or vision benefits. (In the following days and weeks, Cerebral temporarily extended benefits several times, ultimately through December 31, 2021.) Affected employees were also told to sign a new contract agreeing to the so-called “piecework” pay-per-visit system by the end of the week.
For many Cerebral employees, this was a shocking about-face for a company many of them had joined because they agreed with the mission of helping patients and improving the mental healthcare system. But interviews with current and former employees, emails, documents and screenshots, show a botched rollout affecting hundreds of people and a change that negatively affected employees’ mental health.
After the meeting, which lasted around 10 minutes, company Slack channels erupted, as many therapists questioned how they could possibly be expected to digest this news and start seeing patients for appointments minutes later. “In order to get paid, you had to see these clients,” one current employee recalled. “Anytime you’re not in the mental space to see clients, it is part of the code of ethics for you to take some time out to work on yourself. We couldn’t even do that, because it was effective immediately.”
A pregnant employee with an upcoming due date shared her worries about losing health insurance on Slack, where another employee expressed concerns about a surgery scheduled for next month, according to screenshots with individual names blacked out that were shared with Forbes. “This was a bait and switch,” one person wrote.
Recruiters also had to start calling employees who hadn’t started at Cerebral yet, but had already quit other salaried jobs with benefits, to inform them of the change, according to people familiar with the situation.
On August 10, CEO Robertson sent an email to staff at 10:31pm ET, according to a copy shared with Forbes. He noted Cerebral had been hiring salaried employees “as a way to meet the rapid client demand experienced in early 2021 and handle the major capacity constraints that providers were experiencing.” But, he wrote, it became clear this model was “not sustainable” and he said there were two options on the table: “execute layoffs or update employment agreements.”
“I am sorry for the decisions that led us here. I am sorry for the actions that we now need to take to stabilize. And I am sorry for any confusion in the communication about the changes,” Robertson wrote to employees. “I understand what it feels like to have the rug pulled out from under you and the toll it can take on your mental health and this, by no means, was an easy decision to make.”
But Robertson’s note rang hollow, especially given the tremendous amount of venture capital Cerebral had raised in the company’s short existence. In October 2020, Cerebral raised a $35 million Series A led by Oak HC/FT with participation from WestCap; all that helped land Robertson on the Forbes 30 Under 30 Healthcare list last December. Eight months later, a $127 million Series B led by billionaire Len Blavatnik’s firm Access Industries, which also included billionaire hedge fund manager Bill Ackman as an investor, propelled Cerebral to unicorn status.
Six minutes after Robertson’s apology email, employees received another email from A.J. Lopez in Cerebral’s human resources department, which said affected employees would receive $2,000 by the end of August “to soften short-term impacts to your compensation.” Existing insurance benefits would be extended another month until September 30, 2021. More information also started to trickle out about how exactly the “piecework” model would work. Employees wouldn’t be eligible for benefits unless they clocked more than 30 hours a week for a period of 90-days and would be re-evaluated on a rolling basis every three months, according to current and former employees.
Some employees said this would require having up to 60 hours of availability open on their calendars, though they would only get paid for the time they saw clients.
Under Cerebral’s model, therapists don’t control which patients they see. A patient goes on the website, fills out a form and then has a choice of dozens of therapists to choose from. This lack of control means, under the new pay structure, no therapist could be guaranteed to hit the minimum threshold of hours. Therapists would ostensibly need to have 5 or 6 clients booked a day, but given the rate of no-show appointments, they would actually need to book well above that number in order to hit the threshold. Some employees said this would require having up to 60 hours of availability open on their calendars, though they would only get paid for the time they saw clients. This was a change from when they were salaried, where there was no penalty when patients didn’t show up for appointments.
“There was an increase in anxiety, depression and trauma symptoms among employees and many had to seek treatment because of the exacerbation of symptoms on account of the abrupt change,” said one former employee.
For regular 45-minute appointments, therapists would now receive $45 and associate therapists would receive $40, according to employee interviews and confirmed by internal documents. For no-show appointments, therapists would receive $10 and associate therapists would receive $8. For the people who did hit the hourly threshold for 90 days, there would be a review to determine eligibility.
Cerebral management backtracked several times and ultimately extended benefits for employees hired before the August change through the end of the year. This month employees were informed whether they hit the threshold for the preceding three months in order for benefits to be extended into next year.
Forbes spoke with several employees who quit in the weeks and months following the announcement, as they sought out better job opportunities. They described a steady stream of exits among colleagues.
In a statement, Robertson told Forbes that Cerebral has “recruited over 400 new therapists and therapy associates” since August. “We believe that our pay rates remain some of the most competitive in the industry,” he wrote. He did not respond to a follow-up question asking how many therapists quit in the same timeframe.
In an ironic twist not lost on employees, Robertson published a post on LinkedIn after the change was announced about his experience recovering from an infection in the hospital. “When I started Cerebral, I was a cash-strapped first-time founder without health insurance. As anyone who has been uninsured knows, getting through daily life means having to make agonizing judgment calls between health and money,” he wrote, calling himself “lucky” to now have access to healthcare. “This experience reaffirmed my belief that we at Cerebral must focus more meaningfully on the intersection of mental and physical health as we grow.”
He did not respond to a follow-up question asking to explain how, given his personal experience, he justified taking health insurance away from some of his own employees.
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