CVS Health (NYSE: CVS) is leaning into its health services efforts, which include several behavioral health programs. Part of that means reprioritizing which parts of the business to grow, contributing to CVS cutting thousands of corporate jobs this week.
Specifically, CVS is doubling down on integrating its newly acquired assets, home health company Signify and senior-focused primary care company Oak Street Health, into its existing portfolio.
“We are unlocking opportunities by connecting Signify and Oak Street to CVS’ assets such as Aetna, MinuteClinic and CVS pharmacy, and driving patient engagement and growth,” CVS CEO Karen Lynch said on the company’s Q2 earnings call Wednesday. “As we scale our health care delivery assets and realize synergy opportunities, we will accelerate our long-term growth trajectory.”
Oak Street Health, in particular, strongly focuses on integrated care and behavioral health. For example, Chicago-based Oak Street Health screens all patients for mental health and substance use disorder conditions via its collaborative care model.
Its integrated care model appears to be paying off. CVS announced that Oak Street grew its revenue by 43% year over year.
As a result, CVS is eyeing major expansion for Oak Street in the next year. Lynch announced that the company plans to grow Oak Street’s footprint by 50 to 60 clinics in 2024, moving into four more state markets.
“This is a very important and strategic investment in our future that we’re making, and we continue to believe that there’s high demand for more access to the differentiated Oak Street care model,” Shawn Guertin, CVS’ chief financial officer, said on the call. “Our analysis has consistently shown that accelerated clinic growth is the right thing to do in terms of optimizing the long-term returns on this investment and expanding access for at-risk populations. … Oak Street will and already is working closely with their payer partners and identifying the key geographies [for expansion].”
As far as layoffs go, the retail giant announced that it cut 5,000 jobs to save $600 million. The company is also employing technology, such as artificial intelligence, to improve efficiencies and curb costs.
“These actions enable us to reallocate resources and invest in critical growth areas such as health services and technology, which are the biggest enablers of our strategy,” Lynch said. “We’ve taken meaningful steps executing on our long-term strategy with tangible proof of the value of our unique integrated offering.”
Oak Street isn’t CVS’ only health service program that includes behavioral health. CVS has previously announced that it is growing its MinuteClinics’ behavioral health efforts.
In May, it announced that six Los Angeles-based MinuteClinics would staff licensed mental health professionals. This entrance into California marked the company’s 14th state that MinuteClinic announced such a move.
“We’re really focused on how we bring mental health across our assets, including CVS MinuteClinics,” Ashley Karpinski, executive director of behavioral health plus enterprise collaboration and care delivery at CVS Health, previously told Behavioral Health Business. “So our MinuteClinic mental health counseling services became available in January of 2021, primarily in Houston, Philadelphia and Tampa. We started in some key markets, then we grew from there.”
Health benefits
Meanwhile, CVS has seen some headwinds on the health benefits side of the business. Specifically, its Medicare segment saw a decline in operating income driven by a higher-than-expected medical benefit ratio.
“These trends were primarily driven by higher utilization in the outpatient setting, as well as dental and behavioral health,” Guertin.
Overall, the company announced $88.9 billion in revenue in the second quarter, a 10.3% increase year over year. Its health service division accounted for the most significant part of its revenue, reporting $46.2 billion.
Its health benefits division reported $26.7 billion, and its pharmacy and consumer wellness business reported $28.8 billion.
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