CVS bets on Array, Carbon. What does this mean for her future behavioral health efforts?

CVS Health (NASDAQ: CVS) kicked off 2023 with investments in behavioral health and primary care startups and may also be looking to acquire a value-based care organization focused on older adults.

These investments appear to be part of CVS’s broader strategy to increase behavioral health offerings and expand into holistic health. Last week at the JP Morgan Healthcare Conference, CVS announced investments in digital provider Array Behavioral Health and hybrid primary provider Carbon. At the same time, speculation has circulated that CVS Health is looking to buy Oak Street Health, a network of value-based primary care facilities serving adults on Medicare.

While Carbon and Oak Street Health are not specific behavioral health providers, both providers offer different mental health services for their patients.

“Large taxpayers, healthcare systems and retail giants are all seeing the same tailwinds in the behavioral space,” Andrew Holm, consultant at Physician Growth Partners, told Behavioral Health Business. “Behavioral Care is perhaps best suited to the digital and telehealth implementation of all medical specialties, and there is a huge need nationwide. Any company that can provide a solution to the access to care problem will quickly become a leader in the industry. CVS hasn’t historically had a robust behavioral solution, so the investment in the space is a logical expansion of their capabilities and service offerings.

Physician Growth Partners is a Chicago-based firm that represents physician groups in private equity deals.

CVS is just one of many non-traditional players increasing 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 in any health care system overall,” Holm said. “Behavioral symptoms are often a precursor to more serious medical conditions, such as anxiety leading to high blood pressure and all 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 the integration of primary and behavioral care because of this, and this investment trend will absolutely continue into the future.”

CVS executives have previously discussed the company’s focus on providing its members with integrated and whole person health.

“We will continue to drive that premise and meet people where they are in their mental health journey,” Cara McNulty, behavioral health and mental wellbeing resident at CVS Health told BHB in October. “That means we are not waiting for people to be in crisis. We are thinking, talking and acting on people’s mental and physical health, consecutively presenting themselves the same way.

A closer look at CVS’s new investments

Perhaps CVS’s most behavioral health-focused investment so far this year has been in Array Behavioral Health Care. CVS’s venture arm spearheaded the startup’s $25 million funding round. The retail giant previously partnered with Array to provide health care for select Aetna members. Aetna is a subsidiary of CVS.

Array’s B2B business model offers virtual behavioral health care services to other healthcare providers, including hospitals and clinics.

It seems that CVS is also betting on primary care companies with a behavioral health element. CVS Health Ventures has invested $100 million in San Francisco-based Carbon Health. The hybrid provider offers virtual mental health services in California and an integrated mental health program with primary care in Massachusetts.

Carbon is looking to expand its behavioral health services across the country, according to its website.

“CVS and payers like United and Aetna etc. have dedicated funds to invest in startups like Array and Carbon,” Holm said. “This allows them to be at the forefront of healthcare innovation and improve their offerings, while generating returns. It is typical for a fund like CVS to lead an investment round and have a significant stake and a seat on the company’s board.”

CVS’s potential acquisition of Oak Street Health would also give the company increased 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 older adults.

“It’s the right thing for the patient, clinically,” Katherine Suberlak, vice president of clinical services at Oak Street Health, said at the Aging Media Network’s Continuum conference in December.

Recent investments not only demonstrate the healthcare 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 them.

“Our digital-led engagement is a priority as we enhance our ability to deliver seamless and connected experiences,” said Karen Lynch, CEO of CVS Health, at JP Morgan. “For many consumers, digital is the first real point of engagement, and we’ve seen significant growth in our digital interactions with our customers.”

CVS has long touted its “omnichannel” approach to care, adding more digital tools could help it offer more options to its Aetna and CVS Health members and reduce wait times.

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