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Double down on health: CVS Health is leading a retail health revolution


Who’s leading the retail health revolution? One of the chief innovators in the transformation of U.S. health care is surely CVS Health.

(To download Special Report: Double Down on Health, click here.)

The decision CVS Pharmacy made two years ago to get out of the tobacco business cost it $2 billion in front-end sales, but it underscored the company’s determination to become a healthcare company. Dumping tobacco, said company leaders, was an essential turning point in CVS’s evolution to becoming a full-service, integrated provider of retail and managed-care pharmacy and health solutions.

“Since CVS Pharmacy became the first and only national retail pharmacy to remove tobacco from its shelves in 2014, the next natural step in the evolution of our retail business was to expand our focus to health and beauty in the front of our stores,” said Helena Foulkes, EVP and president of CVS Pharmacy. “We’ve continued to take critical steps as the company continues to evolve into a premier health and beauty destination.”

Indeed, the sacrifice of the predictable tobacco income stream was just the tip of a large iceberg. No company has done more to build and weld together the components needed to create a complete, cross-functional health solutions model to serve patients and their health plan payers.

Helena Foulkes of CVS PharmacyCVS Health’s arsenal of health resources is unmatched in pharmacy retailing:

  • Undisputed market leadership as both the leading U.S. pharmacy retailer and the nation’s top source for specialty medicines, as well as the leading supplier of medicines to long-term care facilities. In all, CVS dispensed or managed the dispensing of 1.9 billion prescriptions in 2015, and its 30,000 pharmacists filled 21.6% of all U.S. retail prescriptions.

  • Through CVS Caremark, the company operates the nation’s second-largest PBM, with some 75 million members. “CVS Health doubled its PBM revenues in the last five years,” Forbes reported in 2015.

  • Employing embedded nurses certified in rare disease management — and offering such services as Specialty Connect, which allows patients with chronic and serious conditions to pick up their meds at any CVS pharmacy instead of waiting for home delivery — CVS Specialty has become the nation’s largest specialty pharmacy, generating nearly $40 billion in revenues in 2015. “More than 54% of our specialty patients prefer in-store pickup, along with the opportunity to consult with a pharmacist face-to-face,” president and CEO Larry Merlo noted in the company’s most recent annual report.

Its stores have become the “true embodiment of CVS Health’s enterprise mission to help people on their path to better health,” Foulkes told DSN, as the company seized upon the impetus of its decision to dump tobacco to fine-tune the role of its stores.

More and more, “CVS stands for health,” declared Brian Owens, director retail insights at consulting firm Kantar Retail. With the predicted shortage of some 90,000 primary care physicians, he added, “they’re trying to corner the market when it comes to supplemental primary care.” As a result, Owens said CVS is “making a huge imprint on the U.S. landscape. It’s about how they’re able to take care of you from soup to nuts — before you get sick or when you are sick.”

‘A huge undertaking’

To that end, CVS Health has been on an expansion tear over the past two years. Its most dramatic recent move was the acquisition of Target’s pharmacy and retail clinic network in 2015, vaulting the company to more than 9,600 retail pharmacies and more than 1,100 in-store clinics. As of July 2016, CVS operated 9,652 retail pharmacies in 49 states, the District of Columbia, Puerto Rico and Brazil, as well as 1,136 retail clinics across 33 states and D.C., staffed by more than 2,400 nurse practitioners. Those clinics have seen more than 30 million patient visits since their inception, according to CVS.

Absorbing the Target pharmacies was “a huge undertaking,” Foulkes told DSN. CVS this summer completed the integration and conversion of more than 1,600 Target pharmacies to the new CVS Pharmacy at Target format, which also included welcoming some 14,000 pharmacists, pharmacy technicians and advance practice clinicians into the fold.

“We faced the challenge by putting together a fantastic cross-functional team” and completing the integration “ahead of schedule,” she said. “I am so proud of the work they accomplished by working closely with our Target partners. I’m also proud of all of our core CVS Pharmacy colleagues who also played a role in making the transition a success along with our new Target colleagues.”

“But we’ve just scratched the surface when it comes to our pharmacies in Target. With all the CVS Pharmacy systems and branding now in place, we’re turning our focus to introducing our new patients to our innovative pharmacy care and digital offerings — [such as] … Maintenance Choice, Specialty Connect and Ready Fill — that can help increase medication adherence and drive improved clinical outcomes,”  Foulkes said.

With its acquisition last year of Omnicare, CVS also became the largest pharmacy provider to long-term care facilities, serving some 2 million patients. “A lot is happening within Omnicare. In early 2016, we introduced the use of CVS pharmacies to speed the delivery of first fills and emergency needs to the facilities Omnicare works with,” Foulkes said. “We now fill nearly half of all emergency prescriptions through CVS Pharmacy.”

“We’re also piloting our transition-of-care program … to better serve patients as they transition across different care settings,” Foulkes added.

Recharging the front end

Much is happening at the front of the store as well. CVS is building its front-end growth strategy along five “strategic themes” that Foulkes said “are driving growth and positioning us as a leading health and beauty destination.” Among those initiatives are:

Better Health Made Easy

Making health products readily available and affordable, including carving out space for OTC health products that are covered by many customers’ health insurance plans, and expanding healthier food choices. To that end, Foulkes said, “in 2015, we expanded our … healthier food offerings in 500 stores,” with “better-for-you snacks along with a broader assortment of fresh foods and refrigerated grocery items, such as almond milk, yogurt and cheese, along with an assortment of trusted organic brands.”

The move is “driving growth and has been well-received by customers,” Foulkes explained, with 77% of surveyed customers saying that access to more healthy food options at CVS was important or very important to them, and 82% indicating they were impressed by the new offerings.

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