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The Keckley Report

CVS Health Playing a Whole New Game

By November 24, 2014March 1st, 2023No Comments

The following is an excerpt from Navigant Healthcare’s Pulse Weekly. Click here for a complete copy of this week’s article. 

As I matriculate into and out of Ronald Reagan National Airport in D.C. weekly and devour my daily dose of the Wall Street Journal and New York Times, advertising by CVS Health is unavoidable. Its themes are catchy…

  • “Know Your Medicine, Know Your Pharmacist.”
  • “We want to help everyone, everywhere breathe a little easier.”
  • “It’s easy to forget to take your medication, but CVS Pharmacy is happy to help give a friendly reminder to take your prescription. Raise a glass to that!”
  • “Everyone needs a little help with their health. With CVS Health, you can find more convenient affordable healthcare.”
  • “Everyone has a wish. The wish we wish above all, however, is health for those we love. That’s why CVS Health has decided to no longer selling cigarettes in their pharmacies and designed a program to help smokers quit.”

Since the announcement earlier this year when CVS was dropping the sale of tobacco products in its 7,700 stores, CVS changed its name to CVS Health and its stock has increased $23 per share. Along with repositioning its stores and re-organizing its marketing and strategy efforts internally, it also stepped-up its role in shaping health policy weighing in on industry issues like drug costs. Example: the CVS Health Research Institute’s sponsored the October, 2014 Health Affairs’edition that examined ways to  lower specialty drug costs which increased 15.6% from 2012-2013, and are forecast to increase 16% annually from 2015-2018.

On the company website, CVS Health describes itself clearly:

CVS Health is a pharmacy innovation company helping people on their path to better health. Through our 7,700 retail pharmacies, 900 walk-in medical clinics, a leading pharmacy benefits manager with nearly 65 million plan members, and expanding specialty pharmacy services, we enable people, businesses and communities to manage health in more affordable, effective ways. This unique integrated model increases access to quality care, delivers better health outcomes and lowers overall healthcare costs.

And it summed it well in its “We Wish” campaign rollout: “Introducing CVS Health, a new approach, a new purpose, a new promise to do everything we can to help all those wishes come true.”

New, modern drugstores seem to be popping up on every corner. Like CVS Health, most feature healthy foods along with wider assortments of staples, pharmacies with drive-thru and after-hour fulfillment service, ample over-the-counter medication and alternative health offerings, and walk-in clinics with expanded hours.

CVS Health shares a view of healthcare’s future that’s not dramatically different than the vision shared by most established players in our system. Just about every board and management team in every corner of our system has been exposed to megatrends predicting the non-sustainability of the status quo and inevitability of major shifts…

  • From ‘quality’ that’s assumed to quality that’s defined specifically, measured, and publicly reported
  • From price confusion to price transparency
  • From a sick-care to wellness and healthy living
  • From fragmentation to consolidation
  • From employer passivism to employer activism
  • From patient to consumer
  • From cost management to radical cost reduction
  • From volume to value

What varies widely is execution and leadership around these changes: CVS Health charted a bold new direction, took risk, operationalized its strategy internally, repositioned externally, and made key changes in its leadership and partnerships along the way.

Healthcare leaders are prone to risk aversion and understandably hamstrung by complicated regulatory constraints, community expectations, economic pressures and complex relationships with physicians. Many in certain of our sectors (hospitals, long-term care)  do not the face the day-to-day pressure of earnings and investor expectations like CVS Health, but financial performance is no-less a key metric of success in every sector. But CVS Health competes in a highly regulated, capital intense, labor intense market like everyone else in our industry. The difference is not recognition of change ahead: it’s about leadership and execution.

CVS Health appears poised to play a growing, prominent role in how healthcare system evolves to its new normal. It’s clear the company is about more than modern stores and catchy advertising. CVS Health is not likely to ask permission from local hospitals and physicians to neither expand their clinic and primary care services to consumers nor seek approval from health insurers to offer health management services to employers.  They’ll assess the risk, make changes and execute.

It is worth paying attention. They are playing a whole new game.


Sources: www.cvshealth.com M. Lotvin, William H. Shrank, Surya C. Singh, Benjamin P. Falit, Troyen A. Brennan, “Specialty Medications: Traditional and Novel Tools Can Address Rising Spending on These Costly Drugs,” Health Affairs, October 2014, vol.33 no. 10

The opinions expressed in this article are those of the author and do not necessarily represent the views of Navigant Consulting, Inc. The information contained in this article is a summary and reflects current impressions based on industry data and news available at the time of publication. Any predictions and expectations noted herein are inherently uncertain and actual results may differ materially from those contained in this article. Navigant undertakes no obligation to update any of the information contained in the article.

© 2014 Navigant Consulting, Inc.