Building Mental Health Practices Without Burnout with Dan King

welcome to Mental Health Evolution, a podcast about what's changing in mental health and why it matters. I'm your host, Rachel Harrison, inviting you into honest conversations with people from all perspectives in the field. Clinicians, tech founders, investors, insurance companies and all the folks in between. Let's explore what's working, what's not, and what's next. Welcome back everyone to the Mental Health Evolution podcast where we are talking about how the landscape scape is quickly changing in the mental health industry. Today we have a guest with us, Dan King, who is the founder and CEO of Fireside Strategic. Welcome, Dan. Dan leads Fireside. Of course, of course. It's good to have you here. So Dan leads Fireside Strategic, which is an organization that acquires and nurtures outpatient mental health practices with a strong focus on clinician satisfaction and workplace culture. With a background in mergers and acquisitions, law, policy advising, private investing and executive coaching, Dan brings a rare mix of legal, financial and human centered insight into building mental health businesses sustainable, sustainably. Earlier in his career, he advised Canadian cabinet ministers on entrepreneurship programs and even worked on Kevin o' Leary's deal team for Shark Tank. A lot of us have seen that giving him a front row seat to how high growth deals are made. He has since raised institutional capital, built and sold his own coaching firm and taught entrepreneurship at McGill University. Outside of work though, Dan is passionate about meditation and tennis and has traveled to more than 50 countries and has even completed extreme road rallies like driving a Fiat from London to Mongolia and a rickshaw across India. Those are some pretty cool experiences, Dan. I like it. All right, so as usual we are going to start this conversation with a little bit of of some articles that is are going on in the news right now. Kind of giving you a sense of what's out there and, and the baseline for what we're talking about and why we're talking about it on this pod. So the first one here is called Mental Health's Investment Resurgence and it says a market ripe for innovation. A look at why investors are increasingly focusing on mental health and what innovations are gaining traction. So in this article from Galen Growth, they highlight some of the trends from investors in the mental health industry over the last five years. So I'm just going to ping these highlights for you today. Mental health funding has re emerged as a bright spot in digital health investment, rebounding sharply. In 2024, the sector attracted 2.7 billion in venture capitalists, a 38% increase year on year, making it one of the fastest growing segments in healthcare technology. So the bottom line there is there's a lot more funding going into mental health. Secondly, mergers and acquisitions also the shorthand for that M and A within mental health has remained strong, primarily driven by the sale of financially distressed startups. And 71% of M&A deals in 2024 were venture to venture transactions. And also large digital health players acquired smaller startups to expand their product portfolios. So a lot of this is happening on the tech side. For investors, the mental health market presents a high growth opportunity, but success will depend on backing sustainable and clinically validated solutions. Which is one of the reasons I'm excited to talk more to Dan. The shift toward late stage funding indicates a preference for startups with proven traction over speculative early stage delays. And for startups, regulatory compliance is becoming a significant barrier to entry. So while funding is available, startups need to prioritize their evidence based outcomes and regulatory approvals remain competitive. And lastly, for industry leaders, with insurers and health providers increasingly integrating mental health solutions, corporate partnerships are a key growth channel. However, the slowdown in partnership activity suggests that companies must adapt to market dynamics. So the long and short of that is there's a lot happening, there's a lot changing, but but there's a lot of investment still happening in the mental health industry, especially on the tech side. The next article I want to highlight is called Venture Capital's Priorities are Evolving as Behavioral Health Market Insights on how funding trends are changing in behavioral health and this is an article from Behavioral Health Business. A few highlights for you. It says more than 12.5 billion has been bet on digital behavioral health in the last five years. According to Rock Health, funding peaked in 2021 Covid years with 5.7 billion spent that year alone. And a quote from Margaret Malone, who's a principal at Flare Capital Partners. She says it's our responsibility to help invest in founders who are forward thinking and see where the puck is going to, but also know how hard it is and what the existing infrastructure looks like today. This article continues to talk about that. At the end of the day, venture capitalists raise money from limited partners. They have a duty to generate a rate of return on the money they invest in these behavioral startups in a limited period of time. That is why they push growth. If the startups can't grow spectacularly or or ultimately can't become profitable, which is really how you create value, then it's not going to work and these companies die away and patients are left suffering. So we will dive into that question as well. But with that kind of background, knowing there's a lot of investments happening, there's a lot of rapid growth pushes, there's this business focus in the mental health industry specifically that maybe hasn't been there to the same level as it is now. I want to dive in with Dan because as you heard, he's got a very extensive background in a lot of these areas. And I would love for you all to hear from him more how he's thinking about things. So, Dan, let me just dive in and ask you about venture capitalist firms entering the mental health space backing many different companies. What is your perspective on why this is happening and what are some of the benefits of and the risks to this?

So thank you again for having me, Rachel. And I need to start off by saying I am not a venture capitalist. That word has a very specific meaning. It speaks to a very specific model of investing. So folks on the clinical side may or may not be familiar with how to define what a venture capitalist is, but for simplicity's sake, a venture capital fund is a fund that is seeking very exponential returns. Generally, they are investing exclusively in technology companies. Technology companies. The risk return profile from an investor's perspective is very different than with non tech businesses. We do not invest generally in technology businesses. There may be exceptions here or there if there's a synergy with the, with the type of business that we typically invest in. But I just want to be clear. We are not a venture capital fund or a venture capital firm who have. I am running a venture capital fund, fund or firm. I am looking to deploy a certain amount of capital over X amount of time. I have to make a certain number of investments. And the general expectation is that one or two of those will be massive home runs. In other words, they're going to generate an exponential return. Maybe one of them will do okay and then the others may fail. And if they fail, they may fail completely. They may go to zero. Okay? So as we start to think about the financial and human costs and benefits, we have to bear in mind that that's one specific model of investing. It is not what we do. Lots of investors are not VCs. And I so often hear in this conversation people on the clinical side talking about venture capital investing. And yes, that is one model of investing, but it isn't the only type of investor out there. And so as we start to understand the costs and benefits, we want to understand the different models of investing because there's all kinds of different incentives at work. Does that make sense?

Love, love, love that clarification because I hear these terms thrown around all the time. Venture capitalists, private equity, merger and acquisitions. You call yourself, I noticed an investment company. So you kind of don't use any of those terms really for what you do. So I love that you are differentiating that. And what would you, what should clinical clinicians, clinical practices know about the different types of investment?

Very, very high level. I just explained how VCs work. Private equity is a different animal. Sometimes we are called private equity, sometimes we're not. We actually talk about this internally because the incentives really matter. Just a couple of weeks ago we were talking about it. And even within each of these universes, there's all kinds of subcategories and it gets kind of complex, which is why I really enjoy having these conversations. And I think, you know, it's so important for us to understand what everyone's agenda is. So I try to be transparent, certainly when I'm dealing with a practice that we might invest in, but I very much want to be transparent with the broader mental health universe to start to educate the market so we can all have honest, open conversations about what we all want in the private equity world. Generally speaking, the investments are not made in technology companies. There are exceptions, but generally speaking we're talking about more old school companies. Okay, so part of the reason we are sometimes referred to as a private equity is we invest in group practices. These are not fancy technology companies, right? These, this is a old school business which some people will view as less sexy. Right? A lot of people who go to fancy MBA programs want to work for either venture capital or VC funded startups. And it's sexy in the sense that the potential for growth is very high, but the risk is also higher. So we as investors are not taking quite the same risk that VC people are taking and PE people don't expect the same level of growth. But what's also interesting is that within the PE category, there's a lot of innovation nowadays and a lot of people are exploring different ways to do things. How can we not just include social impact but make that as important as profitability? In my opinion, in mental health, if we leave the venture world behind, if we get more into the PE world, what I would argue is that profitability and human fuel each other. We, we will actually obtain in the long term the most profitable returns for our investors if we really, really care about the human side of the equation. I think my personal view is it's Harder to make that case in venture. And we can get into why that's the case, but for simplicity's sake, let's just say that there's venture that are shooting for super high risk return profiles, there's PE that are taking less risk, but also have less of a need for profitability. And I think there's more potential for innovation to include other factors in our decision making.

Yeah. So that leads me into a question about your story. How did you personally decide to start this company? How did you decide that this was what you wanted to invest in and spend your life's work doing?

It's a. It's a long story. I don't know how much time we have, but the simple version is, in a lot of ways it found me. You know, I. I think that when people, you know, there's this beautiful book that influenced me years ago called Range by David Epstein. I don't know if anyone knows that book, but it basically says when you're planning your career, there's two broad mindsets to come from the specialist or the generalist. And the book contrasts Tiger woods with Roger Federer. You know, Tiger woods from a very young age just played golf, and his dad forced him to play golf all the time and do to do nothing else. And he made a lot of progress very quickly, but he ran into some issues later on in life. Whereas Roger Federer, before he came to tennis, he played a whole bunch of sports. He played cricket, he skied. I can't remember all the sports he played, but he played a lot of sports and it took him a little longer to find his footing. And so I very much identify with Roger Federer more than Tiger woods, not just because I like tennis, but because I'm a generalist by orientation. I explored a lot of different worlds, and in retrospect, all these worlds, you know, I think these things tend to happen for good reason. And so each of these experiences gave me knowledge and gave me a sense of the world that I was able to bring together. And so to me, the most interesting companies, the kinds of companies I invest in, are often run by generalists, but with supportive specialists because we work best when we work together. So the short version is starting in law. I knew that there were aspects of it that I enjoyed, but I didn't love the environment. It felt very militaristic and hierarchical to me. And when I went to the Shark Tank, when I went to work on Shark Tank for one of the investors there, I really loved the entrepreneurial angle of things. And I started to notice that there were culture issues with a lot of companies that investors backed. And that sparked my interest in culture. And I left law for a time, went back to school to study organizational psychology because I wanted to understand how we, as investors could have done a better job with culture and ultimately built a few companies in that space. And building company from scratch, I realized was, you know, I had some failures and some successes doing that. And I thought, oh, can't I combine the culture with my M and A roots? Why don't I go back to what I learned originally and fuse those together? And I need to do it in a space where I feel a sense of admission. And, you know, the brain was always at the dinner table for me growing up. Dad is a brain doctor, mom has some background in psych, and all kinds of formative experiences in college with friends with mental health issues always made that interesting. I was always reading about, you know, mental behavioral health in my own time. And so I had a hypothesis. Maybe, maybe there's a positive impact I could have there. And over time, I tested the hypothesis. Slowly but surely, the world gave me the feedback that, yeah, you're onto something, and you better do this because we're going to stop you from doing anything else.

I like that. I like how it found you. And it's. And that's interesting, that sense of mission, of bringing your worlds together and having something that you truly believe in. I think that's interesting for people to hear because sometimes in our field, on the clinical side, I think money can almost be seen as the enemy or the antithesis. Like, if you're pursuing money or profitability, that is the opposite of helping people. So I'm curious if you can speak at all to how you sort of merge those two things.

Yeah, I was flying yesterday and I listened to this wonderful podcast by a guy named Michael Neal. The podcast is called Caffeine for the Soul, and the episode is called Rethinking Business. And he makes a point that you can essentially come from two places when you start a business. You can feel deeply insecure. You can be trying to solve your own pain through business, which is not the healthiest place to come from, or you can feel already secure, largely. You can feel like you're free. And you're coming from a place of pure possibility, where a solution mindset to a big problem that you feel able to. Able to solve is there for you to solve. I think the same is the case on the clinical side, by the way. You can come from a place of deep insecurity. You can come up from a place of having very, very deep money wounds, or you can come up from a place of largely feeling already secure. Right. About money, about work. And I know which kind of clinician I would want to work with, and I know which kind of investor I would want.

Yeah, yeah, I really like that. Yeah, I think there's a lot there. But what do you feel like you want clinicians to know in terms of. Or practice owners to know? If you are, if you are meeting with a company for the first time and talking about maybe opportunities, what is your lens? What are you thinking about? What's, what's good for people to know,

what's good for clinicians to know when they meet with an investor or practice

owners, which are often one and the same in my field. Right.

So if I'm a clinician and I'm thinking about meeting with an investor or a practice owner, I want to get so, so clear on what my goals are, what do I really want, what's in alignment for me. And you want to suss out as quickly as you can whether the person that you're considering working with, the organization you're considering working with is in alignment with your mission, looking to make a big, big potential partnership. Whether you're a clinician joining a group practice, or I'm a practice owner considering working with an investor. Be honest with yourself. Are you aligned? Right. And ask questions to understand how you know this person and this organization sees their mission. But then also read between the lines. So listen to the words, but then also listen to the energy behind the words. And as clinicians, you're often uniquely gifted to be able to do that.

Absolutely. I like your focus on transparency. I'm wondering, do you ever hear negative feedback about what it is that you're doing or challenges to that? And I'm curious how you respond to those things.

Abs 100%. I don't want to quite say every day, but very often and every piece of negative feedback is different. There's the substance of what's being said and then there's the energy behind what's being said. So I try to listen to both. And there's a lot of complexity in what we do. And I try to do my best to appreciate the complexity that someone else is coming from, well, articulating what we have to deal with. And I can't share everything all of the time. That's not realistic or fair to everyone because there's so many different stakeholders involved in what we do. But I try to understand, again, what is in alignment for everyone. And what I can always be transparent about is what our high level mission is. And if that doesn't feel aligned then we should go our separate ways. And, and sometimes people come to us and they don't really know exactly what they want or they change their mind, you know, two or three months later. And so part of my coaching background has trained me to sit with people who are in that moment of possibility and help them figure it out. Because they often don't know.

Right. And I think, you know, having clinician led practices, which is largely what has kind of grown up in this field, is such a different perspective than maybe a business owned, you know, coming, coming to start it from the business side. Somebody who went and got an MBA and did like that whole track of things. It's such a different mindset. And I think it's interesting when you talk about alignment, I feel that even within my practice and thinking of staff, we're always how aligned are they with our, are what we're doing as a company and if they're not, they could be an amazing talent, all kinds of things. Right. But if they don't have that, then it's just not going to work out.

It's so interesting to hear group practice owners talk about how they interview. And some of the wise ones are trying to suss out not just what is the clinical ability of this person, they weren't, did they actually want to start their own practice? And so there's an classic assumption that you don't want to hire them if they want to start their own practice. But that could still be in alignment because you could have an open, honest conversation right about that and maybe they'll tell you, you know, I want to work for you for two years and then go off on my own. And that might work for you, it might not. But the more you can get to that place of openness about alignment, the more you, you'll know relatively quickly whether this is the right choice for now or not.

What would you consider a successful investment from your side of things? How do you, how do you see maybe that that process go forward and what does it look like from at the beginning versus the end?

So we are always measuring the human and the financial try to integrate them. So as part of due diligence, we want to understand how satisfied clinicians are. And of the 70 or 80 practices that I've spoken with, I would say a vast majority do not survey their clinicians in any kind of even informal way. And so for us, due diligence always includes a culture survey and we want to understand what do clinicians actually think. The data is always imperfect, but we can get a pretty good sense of that. So success looks like an increase in clinician satisfaction. Success looks like improvements in clinician retention as well as profitability. All of those are things we measure and in general, not always. You know, the incentives are sometimes at cross purposes, but in the long term, I believe the two fuel each other. We're going to get the best outcomes in both. If we have a long term mindset, we're in this for many, many years to come. If I was more short term minded, the incentives would be more likely to be at cross purposes. Right. That's not the kind of business that's in alignment for me. So if I even tried to build that, it wouldn't work. So I want to measure all of those factors.

Yeah, that's really interesting. I'm finding it curious because some of my thinking as a group practice owner is that and what I tell my staff all the time is we're going to aim to make decisions that are good business decisions, but are also good clinically and good for the people here. Like those two things, both have to be what we're looking at. And they can often seem to be at odds. And so sometimes it does take talking a lot as a leadership team and figuring out how do we make a choice here that's in alignment with both of those things.

I think in the short term, it's more often that you'll find that the incentives are at cross purposes. It's more common in the long term. In a group practice, I'm completely convinced that they're not. So if you look at where your practice is now and you look at where it could be, if you're more profitable, you can pay your clinicians more. Not only can you pay them more, you can provide benefits, you can introduce them to other types of specialties, you can broaden their minds as to what's possible in not just mental health, but wellness health overall. The range of possibilities available to you is unbelievable. That doesn't all happen in five minutes.

Oh, of course not. Of course not. Yeah. Yeah. And that's interesting because you talked about your entrepreneur journey and from what I'm looking at from a business perspective, you are choosing at this point to come in and take a practice that has already done that startup part. Really, you're coming in and you are taking it to the next level. So I'm curious, what's the inspiration for that for you?

So you know, we all, in searching for our purpose, we have to be very honest about what we're good at and not so great at. And I. I'm just not the best at cleaning up messiness. You know, you should look around here. I just got back from traveling. It was pretty messy here, and it took me quite a lot of time to figure it out.

Yeah.

So something that is already in good shape. Right. I am wired to take it from good to great. Our team, we have the right team to take it from good to great. I'm not saying messy to good. Can't be done. Right. Of course it can be done. It's just you have to be honest about why you're here and what you're good at. Right.

Fantastic. Yeah. So I would love to also get your perspective on kind of zooming out to the wider, like, what's happening in mental health overall. There is a lot of tech, which you made it clear that's not your side of the investment piece, but there's a lot of that happening. There's a lot of venture capitalist things happening. As we read in the article, what do you kind of see as trends in this industry and what are you paying attention to in that. Paying attention to in that trajectory?

What am I paying attention to in the realm of tech and mental health?

Just the industry overall. Like, as you're watching all of the players and considering where you are in that, I'm just curious some of your overall thoughts, but also what that means for your company and for you.

Yeah. One of the things I am watching and also just am personally very invested in is what I'll call the shift towards comprehensive behavioral health. So the frontline of mental health, you know, the mental health crisis in America, are outpatient group practices, which are primarily therapy practices. Right. And therapy is a beautiful tool, so useful in the right context. And because the plurality of mental health workers or therapists, we sometimes use it as a hammer. So we try to hit every kind of nail with that hammer. And it just isn't the right tool for everything. And it's also a more effective tool when complemented with other approaches. And if we want to talk purely what's often called behavioral health, that means psychiatry. It means, you know, the psychedelic revolution.

Yeah.

It means. It means neuropsychological and psychological testing. So beyond culture, the sort of second plank of our mission is to create practices where, you know, usually we're. We're. We're looking to add services, depending on what clients will. Will be served by best and, you know, what will also boost profitability, because that's going to, in turn, boost clinician retention. So I think that there's. We live in a complex world, and trying to use one tool, as great as it is, as proven as it is, to solve every kind of problem is a mistake. And ultimately, look, there's so much we don't know about the brain. There's so much we don't know. And science is now, and science and spirituality are, to me, crystal clear that the brain and the body are deeply integrated, 100% deeply integrated. And so we can talk about mental and behavioral health. And if we totally exclude physical health from the conversation, that's a mistake too. Right. And so we're very blessed that our sort of lead operating partner, head clinician, a man named Dr. Michael Goldberg, took the lead in integrating behavioral health into primary care, where he started his original practice in Massachusetts. We would love to see more of that. And so there are. You know, I'm very much watching to see how we're able to think in a systems way across the industry, which sometimes runs across purposes, with an entrepreneur's desire to see a specific problem and come up with the simplest solution as quickly as possible. And I can get into more of where that balance is if you want, but I am. If there's one trend that I'm most interested in, it's. It's that.

Yeah. It's the collaboration of different healthcare providers working together.

Yes. Or. Or even training different individual healthcare providers to think of it more broadly. Mm.

Yeah. Okay. That's interesting. Like, this is a rebrand for this podcast, and last year we did the Mental Health Entrepreneur, and it was all about bringing in people that were doing creative, innovative things in mental wellness. I kind of like to think of it more broadly as mental wellness than just mental health, because I do think there's a lot of room for creativity in that. And it sounds like that's a bit of where you and your team are inspired as well, is to think of

very, very much so. Very much so. It's where the future's going. We're not going to be able, in the practices we invest in, to provide the best results for clinicians or for, excuse me, patients as well as clinicians. Ultimately, if we don't have that mindset, it's crucial.

Well, we are about out of time for this recording, but I just wanted to offer up one more opportunity for you to just. If there were something that you could share with our audience, what would that be?

So just had a wonderful conversation with Dr. Arpan Parikh, who's the chief medical officer over at Soul Mental Health. And the conversation was about non clinical and clinical partnerships. One of the most important things in general that I want to see, and certainly we're a stand for it, but I would love to see it across the industry is, are those sorts of partnerships. So clinicians know so much that non clinicians like us don't know, but also vice versa. We're trying to solve a complex problem, building businesses that serve patients who are dealing with some of the hardest possible problems humans can deal with. And we're trying to build a business at the same time. It's really not easy to do. So this is a complex problem. We need to bring different skill sets to the table. And so that conversation was very much about the best mental health organizations are true partnerships between clinicians and non clinicians. I really, really, deeply believe this. And so part of what I want to do, look, I, I'm a capitalist, but I also really, really care deeply about mental and behavioral health. And so part of why I am here is to create these sorts of partnerships. It's what we do every single day. And it is a lot of work because different people almost speak different languages. Right. But we need to be able to integrate those together to solve complex problems. It's what the book range that I talked about at the beginning stood for and it's what the best mental health organizations stand for. And so when I see content from clinicians who are skeptical about investors, I get it. And you probably should be skeptical of some investors, even us, right? You want to understand where are they coming from. You want to be sure that there's alignment. But I also, at the same time as you have that, as you hold that skepticism in your mind, I also want you to hold open the possibility that as clinicians, you probably don't have business training. There's a hell of a lot you don't know too. And so approaching this from a standpoint of humility of us working together, finding the right non clinician partners is absolutely essential if you want to build the best mental health organization.

Awesome. Well, with that we are going to sign off for today. Dan, this was really awesome to hear from you. So appreciate your perspectives and, and your openness with this conversation. We will be back next week to discuss more of the issues relevant in the transition of the mental health care industry. Thank you for listening and bye for now.