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Anthem - the second-largest health insurance company in the US by membership - purchased behavioral health firm Beacon Health Options for an undisclosed sum, according to Forbes. For context, Beacon Health Options provides mental health, substance abuse, and behavioral health services to more than 36 million individuals across the US.
The move expands Anthem's behavioral health capabilities and ties into the health insurer's larger push to deliver comprehensive care to its members. Anthem's acquisition of Beacon Health Options fits neatly into its whole person care approach - which aims to connect individuals with the services they need for physical health, mental health, and substance abuse, while also addressing social determinants of health (SDOH).
Through the acquisition, Anthem gains access to the startup's behavioral health solutions like Beacon Care Services, which grant its members greater, more convenient access to mental health services. This can can help prevent mental health issues from becoming more serious and expensive, and help Anthem cut down on its share of the $238 million projected to be spent on mental health services in the US in 2020. Further, Beacon has proven its programs can produce significant savings by reducing ER visits among mental health patients - which is likely an attractive proposition for Anthem, considering an ER visit for the average patient with psychiatric needs can cost up to $2,264 per visit.
Anthem's purchase is the latest in a string of plays by insurers aiming to tackle SDOH - and we expect to see an uptick in M&A activity between incumbents and startups with SDOH-focused solutions. SDOH - or nonclinical health-influencing factors like housing and transportation - drive 80% of health outcomes, and we've seen a slew of insurers deploy initiatives to more proactively address these factors to boost enrollees' health outcomes.
In October 2019, health insurers Cigna and Humana announced that their 2020 Medicare Advantage plans would include coverage for SDOH like rides to appointments and home-delivered meals. And CVS-Aetna recently shared its plans to invest $75 million in affordable housing, for example. As SDOH-focused solutions continue to approve their ability to cut down on potential claims and their associated costs, we expect to see well established insurers follow Anthem's lead and pursue more aggressive M&A strategies.
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