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Another Acquisition or Another Nail in the Coffin of the BH Carve-Out?

February 08, 2021

When the health plan Centene began 2021 by announcing its acquisition of Magellan Health, the behavioral healthcare industry seemed largely indifferent. Few seemed moved by assurances from Magellan’s CEO that the new company is committed to “reimagining behavioral health.” Emotions may have been spent from the similar acquisition of Beacon Health by Anthem in 2020.

Reactions may be subdued because few expect behavioral healthcare to be changed much by these acquisitions. This type of consolidation has been anticipated for many years. Some may view these mergers as more hopeful signs of the integration of behavioral and physical healthcare. Yet it may well reflect the integration of business interests more than the advancement of any clinical model.

When managed behavioral healthcare organizations (MBHOs) were formed decades ago, they brought significant changes to our field. They exit the stage now as aging hulks rather than agents of change. Innovation in our field is now less driven by payers and more by start-ups and healthcare delivery systems. If we care about the integration of behavioral and physical health, that is where it will happen.

Let us recall why companies like Magellan first emerged. The dominance of HMOs in the 1990s transformed healthcare with a focus on managing physical healthcare only. Managing behavioral healthcare was untested and unclear. Whatever might be said about the failings of MBHOs, they found a way to bring down escalating costs. Their management tools are now well understood.

Should we trust the wisdom of financial markets to consolidate industries and eliminate the MBHO? Is the death of the MBHO, or the “carve-out,” as these new entities detached from physical healthcare were called, a sign of progress? As we ponder our industry’s future without these big behavioral institutions, the first realization should be that behavioral healthcare leaders lose power.

It is purely a matter of conjecture what this loss of control will mean. At bottom it means that behavioral health will become just one more specialty field to be managed by a health plan. This could be negative to the extent the unique aspects of our field are neglected, but it is possible for rich companies like health plans to fund innovation that benefits all stakeholders.

Behavioral healthcare executives must first adapt to the ownership changes in their contracts, but they then must envision a new world. The march forward to integrate behavioral and physical healthcare is implacable, and yet it is a path with many potential endings. Some will be less appealing than others. Behavioral leaders inside health plans need to hear concerns from other leaders in behavioral health.

My views are shaped by working as an MBHO executive for well over a decade and consulting to start-ups, especially in the digital behavioral healthcare space, for the past seven years. I believe our field should be asking a basic question at this pivotal time in our evolution: Where do we belong? My answer is that we are quintessential primary care practitioners.

Integration with physical healthcare should not be our goal. That goal is too vague. Some of its formulations could be disastrous. Behavioral healthcare is a poorly financed, stigmatized specialty that will steadily become part of general healthcare. If there is not a strong ultimate vision, the shape of that integration could hurt our field. Yet a loss of autonomy does not necessitate a loss of imagination.

Primary care is the logical position for behavioral health in our healthcare delivery system. Behavioral issues are pervasive, potentially disabling, and commonly comorbid with medical conditions. Primary care is the critical point in our healthcare system where behavior change can prevent many illnesses, reduce the impact of others, and help maintain optimal functioning for those with chronic diseases.

What about specialty programs for mental and substance use disorders (SUD)? The primary care system imagined here would become a feeder to those programs. It would be an unbiased, clinically designed system intervening early in the progression of disorders and referring to the appropriate level of care. Our facilities have always lacked such referral channels. MBHOs poorly addressed that deficiency.

Our programs and facilities for mental and substance use disorders have long existed as silos with few sensible conduits into them. It is one reason fewer than 15% of those with SUD get treatment. We need to improve the quality of care in our specialty programs, but we also need to normalize the flow of patients through them. Let us make the death of Magellan the rebirth of our field within primary care.

This strategy for repositioning our clinicians within primary care is a critical first step, but the related changes for our specialty programs and facilities need to be considered. Let us replace micro-management by MBHOs with a model rooted in this new primary care system. Ending the historical separation between outpatient and inpatient care in our field will be explored in this space next week.

Ed Jones, PhD, is senior vice president for the Institute for Health and Productivity Management.

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