Meet Geode Health: The Team-based Hybrid Mental Health Model of the Future
Before we get into the details of how this deal came together, let me introduce you to Geode Health. Starting 4 years ago in the middle of the pandemic by two former DaVita executives, Gaurav Bhattacharyya (CEO) and Mike King (COO), Geode emerged from a simple but profound question: “Can we develop a behavioral health model from the ground up that actually works?”
Geode was extremely thoughtful about the model they were developing, bringing together top psychiatrists and rigorous evidence-based clinical studies from Columbia, Mass General, and other leading programs to design what behavioral health care should look like if you could build it from scratch. No legacy constraints. No “that’s how we’ve always done it” thinking.
And this is where Geode Health started. The firm launched a psychiatrist led, team-based platform (hybrid, but an emphasis on clinic-based services) born during the pandemic with backing from KKR and now Baylor to build at scale. Every patient starts in person with a psychiatrist for an hour for initial intake. From there Geode builds a plan that can include a psychologist, an advanced practice provider, and a therapist based on patient comfortability and need. Virtual visits support the plan when they make sense. Not the other way around. This 4-expert model approach resonated deeply with Baylor and intrigued the team during initial prospective conversations.
The model speaks for itself from a clinical perspective. Pete and Mike pointed to internal data that 78% of patients show meaningful clinical improvement within five months for most low-acuity mental illnesses (this is not tackling serious mental illness, FYI). That outcome orientation lined up with Baylor’s clinical bar and with their consumer promise. Not “engagement metrics.” Not “app downloads.” Real clinical improvement.
Currently, Geode operates 13 sites in Texas (8 in DFW, 3 in Austin, 2 in Houston), with additional presence in Illinois, Georgia, Wisconsin, North Carolina, and Iowa. But here’s where it gets interesting – they want to hit 100 sites in Texas alone over the next five years. And with Baylor’s help, they might actually pull off the aggressive growth trajectory.
Oh, and did I mention Geode takes insurance? Team-based model, takes insurance, financially viable for Baylor, accessible for consumers…this setup is fantastic. But the current status quo of behavioral health is not.
The Economics of Behavioral Health are Tough for Health Systems
“Healthcare in the United States is broken. It’s totally broken in a lot of different dimensions. And one area it’s completely broken in is its infrastructure and capability and, frankly, willingness to provide behavioral health solutions.”
Here’s the common reality for healthcare – and more specifically – mental health in the US. 1 in 5 Americans need behavioral health services, but they fail to find a provider or get access to proper care. Pete put it a bit more bluntly: “Any family that tells you they don’t have behavioral health needs for some member of their extended family, they’re lying to you.”
From a coverage and access perspective, here’s the brutal reality that every health system faces:
- Financial difficulties. Psychiatrists have largely gone cash-only because reimbursement rates are abysmal and were structurally set up to be carved out from the rest of our healthcare system. As a result most of the best mental health providers are cash or private pay
- Virtual-only solutions aren’t working. Even Baylor’s own virtual program – by its own admission – for employees had minimal uptake. Engagement is dismal.
- Primary care doctors are drowning in behavioral volume with nowhere to put it. Most of those patients are told “good luck finding someone” given the lack of availability of providers who take insurance.
- Labor scarcity. Mental health practitioners are tough to find, recruit, and retain, similar to most other roles in healthcare.
Mike laid out the dire need within Baylor organizationally for something to be done in this space for me: before this JV, Baylor was already seeing 50-70 referral requests per day from their primary care doctors. And most of those patients had nowhere to go…until now.
Geode’s Secret Sauce: A Model That Actually Makes Sense
What makes Geode different isn’t just that they take insurance (though that’s huge). It’s their entire approach to care delivery.
Here’s how it works:
- Psychiatrist at the top: Every patient who needs medication gets face-to-face time with an actual psychiatrist. This isn’t a 10-minute telepsych consult. The first visit is typically an hour.
- Team-based care: After that initial assessment, patients get a personalized care team that might include psychologists, psychiatric nurse practitioners or PAs, and therapists
- Hybrid by design: In-person when it matters, virtual when it’s convenient. Not virtual-first with in-person as an afterthought.
- Proven protocols: They use evidence-based protocols from Columbia and Mass General, not whatever the latest digital health startup is peddling
But here’s the real kicker – they can actually recruit providers. When Geode put out an ad for behavioral health APPs for their Richardson site, they got 31 applications. Baylor noted they don’t get 31 applications for five APP positions in their regular postings.
Behind the Scenes: How the Baylor-Geode Deal Came Together
This wasn’t a quick handshake deal. Baylor was looking for a solution in this area for quite some time. Mike spent 18 months scouring the market for something comprehensive. Baylor tried building their own virtual platform leveraging their 20+ psychiatrists in Temple. Nothing was working at scale.
Then Geode came into the fold. That conversation with Geode started almost two years ago. And what’s fascinating about this joint venture in the first place is that they were doing something novel. While most moves in healthcare are a ‘keep up with the Joneses’ kind of scenario, both sides acknowledged from day one that there was no prototype for this. No other health system had done a true joint venture in behavioral health.
Unlike Geode’s partnership with Emory (which is essentially just a referral relationship), Baylor wanted real skin in the game. The JV was officially formed on August 1st.
Another huge deal (pun totally intended) for Baylor was Geode’s willingness to work with them. As former healthcare executives with extensive experience, Geode leadership was highly supportive of things important to Baylor. For instance, Baylor’s psych residency program and being able to maintain them. Down the road, Baylor residents may rotate through Geode sites, but the lesson in this is clear for anyone looking to partner: understand what’s important and be a true partner. Meet them at the table.
For Geode, signing with Baylor is huge. It’s a step forward in legitimacy beyond the 13 sites they have today, and it’s a real pathway to creating future partnerships with health systems across the country also looking to potentially fill in this mental health gap for their patients. For Geode, it’s about the long game too.
Why Geode? The Decision Criteria That Mattered for Baylor
Baylor didn’t just pick the first behavioral health company that came knocking (and none were, as I touched on). They went through a rigorous evaluation process for Geode as a partner that other health systems can emulate or take best practices from:
- Clinical validation first: Before talking business terms, Baylor’s psychiatry leaders spent extensive time validating the clinical model. After the initial meetings with Geode and asking Baylor’s mental health team for input, Michael was pulled aside by his lead psychiatrist as he said “this multi-provider strategy is exactly what patients need. This is exactly what I would design if I could make one from scratch.” Baylor took that as a pretty positive sign.
- Financial sustainability: This isn’t a high-margin business, but Geode’s model is cash-positive for Baylor even with insurance reimbursement. Cash positive means Baylor can reinvest $$$ into NewCo’s growth to scale Geode’s presence across 100+ sites including markets where Baylor considers mission critical but Geode doesn’t have presence in quite yet (that’ll change soon)
- Scalability: Could Geode’s model grow to meet demand over time? Obviously goes hand in hand with financial sustainability.
- Cultural fit: The ability to protect Baylor’s existing psychiatry residency program and academic mission was non-negotiable.
- Recruitment: Geode’s clinic-based model attracts mental health providers (psychologists, APPs, therapists) like moths to a flame. Given labor as one of the biggest bottlenecks in healthcare today, Baylor leadership noted how many providers signed up for Geode job postings within days – a level of recruitment even Baylor as a multi-billion dollar successful health system can’t achieve on its own. And Geode’s ability to recruit obviously goes hand in hand with scalability of the venture.
Finally, and interestingly, before putting ink to paper, Baylor and Geode implemented and agreed upon a five-year growth plan built directly into the partnership agreement. This type of growth strategy is the first time Baylor has ever done that in a JV signaling their confidence in the incredible demand available for Geode’s services, while Geode as a business gains material upside in working with a partner that wants to scale its team-based behavioral health model across Texas.
With Baylor dictating locations for its Texas markets, Geode’s growth strategy is aggressive but methodical. They’re planning 10 new sites over the next 12 months, with several million dollars already earmarked for the growth from Baylor’s budget. Central Dallas (six blocks from Baylor University Medical Center) in October and Richardson are two key areas as I imagine we’ll see Geode locations pop up across DFW. Beyond Dallas, untapped markets include College Station (they really need all the help they can get down there), Waco, Temple – all Baylor strongholds without Geode presence (yet). Baylor and Geode’s 5-year target is 100+ sites across Texas.
The Bigger Picture: How This Fits Baylor’s Consumer Strategy and Health System Transformation
This JV isn’t happening in isolation. The partnership is part of Baylor’s broader transformation from Healthcare 1.0 (heads in beds, optimize assets) to Healthcare 2.0 (solve actual customer problems).
Baylor’s aspiration as a health system is to become your trusted health partner for every health condition. So to achieve that, Baylor needs to continue to personalize care for the consumer. Geode helps Baylor further these goals.
The Geode partnership connects to multiple strategic initiatives:
- Direct to consumer: Patients can book directly through Baylor’s digital front door
- If you have chronic depression, for Baylor to be their comprehensive health partner, they can now connect you to convenient medication management, while now referring you to a team-staffed model at Geode .
- Primary care integration: Co-locating sites with busy primary care practices will lead to patient loyalty, ability to share resources, and a better integrated experience with primary care
- Employer solutions: Bundling behavioral health into Levanto, Baylor’s employer-focused subsidiary (alongside services like headache care, women’s health, and musculoskeletal care)
As Pete explained it: “We’re not gonna have credibility and we’re not gonna be addressing even what our providers need if we can’t solve this. This is top three in patient needs.”
Baylor strongly believes you lose credibility with consumers if you can’t deliver on their comprehensive, end-to-end needs.
Key Takeaways for Health System Executives
The final bit of my conversation with Pete and Mike were broader questions around joint venture strategy. If you’re a health system executive reading this, here are the lessons you should be stealing from Baylor’s playbook:
1. Embrace Humility in Your JV Strategy
There’s a certain amount of humility associated with joint ventures because you’re essentially saying you’re not good enough at that particular thing. That you’ve come to terms with the fact that you need help, and you’re going to look to the outside for a partner that might do a particular type of service better than you would internally. For Baylor, they’ve accepted this fact as reality for behavioral health, urgent care, imaging, home care, and others as they arise. Baylor knows there are plenty of areas where they can partner and find more efficient, lower cost areas outside of their core expertise. Look around and look at your peers – what are they partnering with for outside services, and if you’re doing it well, good for you. If not, or if it’s an unmet need, you should be considering JV as an option.
2. Clinical Validation Must Come First
Baylor assembled their clinical experts before talking business terms. As Mike noted: “We would not develop a joint venture with any partner unless we very clearly validated the clinical model first.” At every JV, Baylor assembles their clinicians who are subject matter experts – protocol, structure, design, patient experience – things that are really important – and ask for their feedback. They would not develop a JV with any partner unless they very strictly validated the clinical efficacy and approach through their own channels first.
3. Think Beyond the ROI and Money
Pete had a great perspective on the ROI front. “If health systems only approach joint ventures as ‘hey, that’s a great idea where we can make money,’ they’re going to really struggle. There’s gotta be something bigger than simply return on equity.” As health systems evaluate JVs, if they only approach it as “hey we can make money on this” they’re going to really struggle. They become very transactional and that sets yourself up for failure in a model that requires true partnership over a long-term horizon. Stated differently, you need to be thinking beyond this one particular service line or contribution margin or whatever it is.
The future health system or healthcare enterprise, leveraging AI and business model transformation (and…critical thinking skills about what is actually best for patients), will think not in silos like today’s health systems, but rather as an entire ecosystem or enterprise. Many JV setups mean offering services at lower prices than your hospital provides, meaning you’re paradoxically disrupting yourself. But from Baylor’s perspective, “If we don’t disrupt ourselves, someone else will.”
4. Have a Bigger Strategy
If I haven’t drilled it into your head enough, hear it one more time: the future of partnership decisions will evolve into broad, enterprise-wide decisions. What might you have to give up to find net gains across your health system or organization? Every Baylor JV is evaluated against their broader consumer-centric transformation. If it doesn’t help them become a true health partner to their patients, they pass. For Geode – if Baylor did not have the impetus to say “we must have this area for our customer” then they probably wouldn’t have done it.
What’s next for Baylor and Geode
This isn’t just another health system joint venture. This is what it looks like when a legacy health system stops protecting yesterday’s business model and starts solving tomorrow’s problems.
Pete summed it up perfectly: healthcare transformation has to be a collaboration between the legacy health systems and the disruptor companies. The disruptor companies have great ideas, they have point solutions, but to actually deliver on it, you’ve got to have the walled garden. You can’t be on the outside looking in as a health tech company, but as an incumbent player, and you can’t go it alone either.
Geode brings the innovation and the model.
Baylor brings the patients, the infrastructure, capital, and the credibility.
Together, they might just crack a big part of the behavioral health crisis – at least in Texas.
The real question isn’t whether this model, or the health system joint venture structure works. With 78% clinical improvement rates and 50-70 referrals per day (without marketing!), demand is rampant. The question is which health system will be next to swallow their pride, admit they can’t solve behavioral health alone, and find their own Geode.
In the coming 5-10 years, you’re going to see leading health systems work with their “calcified assets” (as Pete called them – I love that turn of phrase) that don’t change much, and reconfigure their supply to more closely match the demand that consumers and employers are asking for. Those that don’t will be left behind or disrupted, rightfully so. Baylor’s understanding of customer needs is what drove them to fill in this sore service coverage gap, and I’m looking forward to hearing more from Geode, but also what’s next for leading health systems looking beyond their 4 walls and turn the hospital stomach inside out.
Sometimes the most innovative thing a 120-year-old health system can do is admit it needs help. Baylor just showed everyone how it’s done.