- CVS Health plans to ramp up its acquisitions of physician practices and clinics as it continues to pursue its primary care strategy and races with other retail pharmacies to build out medical networks.
- The Woonsocket, Rhode Island-based healthcare behemoth already operates a network of MinuteClinics, urgent care locations staffed by nurse practitioners. But CVS wants to broaden its care delivery strategy into a primary care model, including "physician-led primary care centers with integrated virtual and home assets," CVS EVP and president of pharmacy services Alan Lotvin said Thursday at CVS' investor day.
- CVS plans to add a few hundred primary care centers to its network of MinuteClinics, drugstores and health-focused HealthHUB locations launched a few years ago, as it moves from an episodic to more longitudinal approach to care, Lotvin said. CVS also wants to eventually add more specialty services to compete as the retail healthcare market becomes increasingly saturated.
CVS' strategy relies on linking its new clinics, telemedicine and teams of doctors, nurses and pharmacists to focus more intensely on managing consumer health, as it increasingly looks to double down on primary care. Primary care makes up a tiny fraction of national healthcare spending but has a disproportionate effect on outcomes, CVS CEO Karen Lynch said Thursday.
CVS first unveiled the new primary care push last month, with the announcement it was planning a major revamp of its retail portfolio to adjust to shifting population and consumer needs during COVID-19. As part of the remodel, CVS plans to close 900 stores — roughly 10% of its footprint — over the next three years.
As of Sept. 30, CVS had more than 9,900 retail stores as well as 1,200 walk-in medical clinics.
The drugstore chain, one of the biggest in the U.S., plans to create new store formats in a bid to drive higher consumer engagement, including the new primary care locations and an "enhanced" version of its HealthHUBs. CVS aims to open roughly 1,000 HealthHUBs this year — sites devoting about a fifth of their retail space to health services, focusing on preventive care, wellness activities and education and management of chronic conditions like asthma and diabetes.
The company envisions its future stores as "healthcare destinations," Lynch said, more focused on services in lieu of the traditional offerings in its stores today.
CVS was originally mum on whether the new advanced primary locations, which will serve patients with a variety of insurance plans — not just Aetna members —, would include physicians. That mystery was solved on Thursday, as executives said the new clinics will have a doctor-led care team that may include ancillary employees like health coaches, social workers or mental health specialists.
Mental health is one ripe area of opportunity for CVS, Lynch said, citing the unmet need for behavioral care in the U.S.
CVS plans to directly own some of the primary care clinics and will ink relationships with others through management services organization agreements, wherein an organization manages multiple affiliated physician practices and clinics, Lotvin said.
The pharmacy giant noted it expects to be an attractive employer for physicians, physician assistants and nurses due to its assets and experience in the sector. And on Thursday, management reiterated plans to integrate the new primary care services into its health insurance and pharmacy benefit plans, an area CVS has been exploring for a while
The company already has benefit designs integrating virtual and physical care under its payer umbrella, Aetna. That includes some nudging Aetna members to visit its MinuteClinics or HealthHUB locations by charging a low or no copay. CVS also recently launched a virtual-first primary care plan to self-funded employers nationwide.
And, under a new partnership announced earlier this month, CVS plans to use Microsoft's computing capabilities to better combine information from different areas across the company. That should help the payer create more customized offerings, CVS said.
The news comes as other pharmacy chains like Walgreens and retail behemoths like Walmart push deeper into healthcare, including direct care delivery, as consumers look for convenient and inexpensive care options close to the home.
Recently, Walgreens invested $5.2 billion in value-based provider network VillageMD to accelerate the opening of their co-branded medical clinics. Meanwhile, Walmart has partnered with primary care startup Oak Street Health to bring its value-based clinics to Walmart supercenters as the major retailer continues to expand its network of massive "health superstores" in underserved regions.
But CVS said it has assets its retail competitors don't, including a national health plan (Aetna is the third largest payer in the U.S. by market share) and one of the biggest pharmacy benefit managers in the U.S., Caremark.
On Thursday, CVS also issued updated financial forecasts, including better-than-expected revenue projections for 2022.
Management expects to bring in at least $290.3 billion in revenue this year, up from the previously estimated range of between $286.5 billion and $290.3 billion.
Meanwhile, for 2022, CVS projects its revenue will reach between $304 billion and $309 billion. That's higher than the consensus Wall Street estimate of about $301 billion.
CVS stock was up 1% in Friday morning trading following the investor day.