CVS Health (NASDAQ: CVS) has kicked off 2023 with investments in behavioral health and primary care startups – and may even be looking to acquire a senior-focused value-based care organization.
These investments appear to be part of CVS’ larger strategy to boost behavioral health offerings and expand into holistic health. Last week at JP Morgan’s Health Care Conference, CVS announced investments in digital provider Array Behavioral Health and hybrid primary provider Carbon. At the same time, speculations circulated that CVS Health is looking to buy Oak Street Health, a network of value-based primary care facilities that serve adults on Medicare.
While Carbon and Oak Street Health are not specific behavioral health providers, both operators offer several mental health services for their patients.
“Large payers, health systems and retail giants are all seeing the same tailwinds in the behavioral space,” Andrew Holm, an advisor at Physician Growth Partners, told Behavioral Health Business. “Behavioral care is perhaps the most suited to digital and telehealth deployment of all medical specialties, and there is a huge need nationally. Any company able to provide a solution to the care access problem will quickly become a leader in the space. CVS hasn’t historically had a robust behavioral solution, so investment in the space is a logical expansion of their capabilities and service offering.”
Physician Growth Partners is a Chicago-based company that represents physician groups in private equity transactions.
CVS is just one of the many nontraditional players growing their behavioral health footprints. For example, UnitedHealth Group (NYSE: UNH) acquired outpatient mental health provider Refresh in 2022. Additionally, Amazon (NASDAQ: AMZN) announced its plans to acquire One Medical, a hybrid primary care provider. One Medical also includes behavioral health services.
“Behavioral health is typically a huge cost driver across health systems overall,” Holm said. “Behavioral symptoms are often a precursor to more serious medical conditions e.g. anxiety leading to high blood pressure and all of the problems associated with that. Having a behavioral solution under your umbrella is a fantastic way to proactively mitigate costs through preventative care. There is a national push for integration of primary and behavioral care for this reason, and this investment trend will absolutely continue in the future.”
CVS executives have previously discussed the company’s focus on providing its members with integrated, whole-person health.
“We will continue to drive that premise and meet people where they’re at on their mental health journey,” Cara McNulty, resident of behavioral health and mental wellbeing at CVS Health, told BHB in October. “That means we’re not waiting for people to be in crisis. We are thinking, talking and acting on people’s mental health and physical health, consecutively showing up in the same way.”
A closer look at CVS’ new investments
Perhaps CVS’s most behavioral health-focused investment so far this year was in Array Behavioral Health Care. CVS’ venture arm led the startup’s $25 million funding round. The retail giant has previously partnered with Array to provide care for certain Aetna health members. Aetna is a CVS subsidiary.
Array’s B2B business model offers virtual behavioral health care services to other health care providers, this includes hospitals and clinics.
CVS also appears to be placing bets on primary care companies with a behavioral health element. CVS Health Ventures invested $100 million into San Francisco-based Carbon Health. The hybrid provider offers virtual mental health services in California and a mental health program integrated with primary care in Massachusetts.
Carbon is looking to expand its behavioral health services across the country, according to its website.
“CVS and payers such as United and Aetna etc. have dedicated funds to invest in startups such as Array and Carbon,” Holm said. “This allows them to be on the leading edge of health care innovation and enhance their offerings, while also generating returns. It is typical for a fund such as CVS’ to lead an investment round and have a meaningful stake in and a board seat at the company.”
CVS’ potential acquisition of Oak Street Health would also give the company more primary care capabilities, as well as integrated behavioral health services.
Many older adults have a relationship with their primary care provider and integrating services could help make finding care easier for seniors.
“It’s the right thing for the patient, clinically,” Katherine Suberlak, vice president of clinical services at Oak Street Health, said at Aging Media Network’s Continuum conference in December.
The recent investments not only demonstrate the health care conglomerate’s focus on behavioral and primary care, but also its interest in digital. Both Array, Carbon, and Oak Street have a strong virtual component to their care.
“Our digitally-led engagement is a priority as we enhance our ability to deliver seamless and connected experiences,” Karen Lynch, CEO of CVS Health, said at JP Morgan. “For many consumers, digital is the very first engagement point, and we’ve seen significant growth in our digital interactions with our customers.”
CVS has long touted its “omnichannel” approach to care, the addition of more digital tools could help it offer more options to its Aetna and CVS Health members and cut down on wait times.
