K-12 Telehealth Provider Faces Uncertain Future as Funding Dries Up
The 74 | By Linda Jacobson |
Still operating in 21 states, Hazel Health has recently endured two rounds of layoffs.
Hazel Health, which once described itself as “the largest K-12 mental and physical health provider in the nation,” faces an uncertain future after enduring two rounds of layoffs since last fall and the loss of several lucrative contracts with school districts.
In February, the telehealth company let go of 135 staff members, including clinicians who worked directly with students and families, leaving about 500 employees.
The company lost one of its biggest customers, the Los Angeles County Office of Education, last year. It shortened its contract with the Chicago Public Schools because of “challenges securing funding,” a spokeswoman said. And several districts across the country have also either ended their business with Hazel or have contracts that expire later this year.
Hazel’s leaders say they are “restructuring” the company to put it in a better position as it pursues more stable sources of funding, like billing Medicaid and private insurance, now that the federal relief funds some districts used have expired. Company spokeswoman Emilie Fetterley said no additional layoffs are expected “at this time” and that many states and districts plan to renew their contracts.
But according to internal memos, reported by a news outlet covering mental health, CEO Iyah Romm said the company was losing “too much money” to meet its goals. Since the expiration of the Los Angeles contract, the company has even, at times, absorbed the cost of services, Fetterley said.
Some say the company faces a difficult road ahead.
There is a “massive need” to address student mental health and behavior issues, said Adam Newman, co-founder of Tyton Partners, a consulting firm focused on the education sector. Until the relief funds ran out, “there were enough dollars in the system for schools and districts to find ways to underwrite these types of programs. But the risk has always been: What’s the durable funding model?”
In Missouri, the Ferguson-Florissant district, outside St. Louis, ended its business with Hazel last year.
“They were great to work with,” said spokeswoman Onye Hollomon. Hazel served about 2,000 students in the district, which used COVID relief funds to pay for the program. “Once that phased out, we had to make that cut.”
Los Angeles spent more than $28 million in one year to make Hazel available to the county’s 80 districts, according to GovSpend, a data company tracking payments to government agencies. It funded its deal with the company by tapping a $389 million statewide behavioral health care program. Between March 2022 and May 2024, 804 schools in the county referred 9,337 students for services, according to data Hazel provided to the county. Of those, 4,162 students received at least one visit, with students participating in an average of six visits. Fetterley said once a student is referred to Hazel, parents don’t always follow through with a visit or may seek help elsewhere.
In addition to taking a loss on services for some students since last year, Hazel has relied on billing insurance, including Medi-Cal, the state’s Medicaid program, and contracts with individual districts. Leaders are currently negotiating contracts with districts for next school year.
Hazel is also one of eight providers approved for a new program that allows 700 districts throughout California to be reimbursed for services by Medi-Cal or private insurers. It participates in a similar grant-funded program in Iowa, and in Nevada, the Clark County School District uses Medicaid funds to pay for Hazel services, but that agreement ends in June. A spokesperson said the board has not yet decided whether to renew it.
‘Made their mark’
Telehealth programs, delivered through schools, were expanding long before the pandemic. They offer families convenient access to a remote doctor or therapist while preventing students from missing school for appointments that often turn into full-day absences. Hazel Health, founded in 2015 by health care executive Josh Golomb, was part of that growth.
“Telehealth providers have made their mark in school-based health care,” said Nirmita Panchal, a senior policy manager at KFF, a nonprofit focusing on health policy. “They eliminate transportation barriers, where students may not be able to physically get to a provider.”
During the pandemic, when learning and work suddenly went virtual, telehealth programs for schools grew substantially. A survey of school-based health centers showed that during the 2020-21 school year, more than 80% of respondents offered telehealth services, up from 19% in 2016-17.
The financial landscape has since changed. A lot of districts are now cutting budgets to close deficits. GovSpend, which doesn’t capture all district spending, shows a decline in payments to Daybreak Health, a similar company, since 2023, while Cartwheel, another virtual mental health provider, saw a more stable influx of funds from 2024 to 2025.
Among providers, however, Hazel Health stands out. The company, which serves 6,000 schools in 21 states, initially focused on primary health care, with physicians prescribing over-the-counter medications for routine symptoms like stomach pain or headaches. In 2021, the company broadened its model to provide mental health services and respond to “rising unmet student needs and limited access to care,” Fetterley said.
In Florida’s Duval County schools, Brittany Beimourtusting reached out to Hazel last school year when she was going through a divorce. Her middle child, she said, was having trouble adjusting.
“It was a single-parent household all of a sudden, and I thought, ‘How am I supposed to get him to get help because I think he could use therapy,’ ” she said. The provider, she said, met with him about five times and helped him open up about what he was feeling. “It was definitely worth it.”
But when Superintendent Christopher Bernier looked for ways to save the district some money last year, a $1.4 million payment to Hazel was on the list.
‘A connected system’
Four years ago, the startup’s future looked bright.
It attracted over $50 million from investors, including Fiore Ventures, founded by Walton family heiress Carrie Walton Penner. As recently as last year, Hazel was still eyeing growth. It made two acquisitions, including Little Otter, which offers family therapy, to further expand mental health services.
“Together, we are building a connected system that supports children from their classrooms to their kitchen tables,” wrote Andrew Post, then Hazel’s president, in October. But he has since resigned, writing on LinkedIn this month that it was time to turn to the “next chapter” in his career.
Hazel’s contract in Chicago was supposed to run through the end of 2027. Now it will end on June 30. Still, district officials said the layoffs have had no impact on the services students receive. In a pilot program that began in March 2025, the district made mental health services available to 84 high schools. As of January, 420 students had taken advantage of the program, the district said.
In December, Destiny Singleton, the honorary student member of the Chicago Board of Education, told members that students don’t always feel comfortable talking to school counselors about personal issues because those staff members are often focused on academic performance and preparing for college. That’s why talking to an outsider can be helpful. But she added that students at the district’s larger high schools are often unaware that Hazel is even an option.
Some Chicago parents, however, are wary of Hazel and say families don’t always know what they’ve agreed to when they consent to allowing their child to meet with a Hazel provider. In a letter to Chicago district leaders last year, student privacy advocates said they were concerned about whether Hazel properly secures students’ private information.
The company’s acquisition of Little Otter, they said, raises red flags because Rebecca Egger, its CEO, formerly worked for Palantir, a federal contractor known for using AI to assist the Department of Homeland Security in its immigration crackdown.
In a response to Chicago officials, Romm, the CEO, wrote that Hazel does not “sell, share, or use student data for any commercial purpose,” and that it “does not have any relationship with Palantir, commercial or strategic.”
Fetterley, the company spokeswoman, also said Hazel is in the early stages of rolling out chatbots to “simplify administrative tasks like scheduling for parents and clinicians,” but that AI will never be a “substitute for our human providers.”
Even so, some districts see a much higher demand for in-person rather than virtual clinicians. In Broward County, Florida, where Hazel provides medical services, but not mental health support, 179 students completed a telehealth visit between August and December last year, according to district data. Over that same time period, more than 134,000 students visited a school clinic.
“Parents want nurses,” Cynthia Dominique, chair of the District Advisory Council and a parent in the district, told the school board in March. As a nurse practitioner, she questioned how a provider working remotely can diagnose and treat most common symptoms, like congestion or a sore throat.
“I can’t ask the registrar from the front desk, ‘Can you look in the kid’s mouth and tell me what you see?’ ” she told The 74. “They don’t know what they’re looking for.”
For district leaders, however, Hazel’s ability to keep kids from missing school provided an effective selling point.
During a 2023 meeting, Duval County School Board Member Darryl Willie said the program had saved the district 4,000 “classroom hours” during the 2021-22 school year.
“We’re talking about making sure we’re focused on reading, writing and math,” he said. “The only way we can do that is if students are in school, in classrooms, sitting in seats.”
