CVS: From Consumer Value Stores to Consumer Value App?
The retail pharmacy giant CVS recently accepted the digitization challenge and underwent a successful transformation from a drugstore chain to a provider of innovative healthcare services
“Here at CVS Health, we are driven by one purpose: to improve customer health.” Brian Tizler, Chief Digital Officer of CVS Health
To better serve its purpose, the retail pharmacy giant recently accepted the digitization challenge and underwent a successful transformation from a drugstore chain to a provider of innovative healthcare services. CVS was ubiquitous in the United States with 7,866 retail stores by end of 20141), but management believed that an extensive physical footprint is no longer sufficient to help people live healthier lives. The retailer decided to create a “connected” health experience.
Consumer Value Stores
In 1963, the first CVS store was founded in Massachusetts and sold only health and beauty products. CVS stands for Consumer Value Stores. Today, the firm offers several healthcare services, namely:
- CVS/Pharmacy: one of the largest pharmacy chains in the US
- MinuteClinic: retail medical clinics operated within CVS pharmacies
- CVS/Caremark: a prescription benefit management service
- CVS/Specialty: a specialty pharmacy division for individuals with chronic diseases
In 2013, hoping to help people on their path to better health, CVS introduced a Chief Digital Officer to its organization, and hired Brian Tizler to lead the efforts.
Digital Innovation Lab
In June 2015, CVS announced the opening of its Digital Innovation Lab in Boston. The primary focus of the Lab includes the development of cutting-edge digital services and personalized capabilities that offer an integrated and accessible personal pharmacy2).
Non-adherence to medical requirements causes about $300 billion in yearly added costs to the US infrastructure and puts tens of thousands of lives at risk3). The basic reason behind non- adherence consists of forgetfulness. CVS reaches more than 100 million customers annually and 5 million customers walk through its doors daily. CVS has therefore a large opportunity (and responsibility!) to have an impact on people’s lives.
Consumer Value App?
The major digital initiative of CVS was the introduction of a mobile application. The app enables users to refill their prescriptions simply by scanning the barcode and pick up their meds whenever they are ready. The app was well received by the public and was downloaded 11.8 million times3).
CVS was also involved in other digital initiatives. First, CVS introduced CVS Express, allowing customers to order items from the CVS app and pick them up at the curb of a CVS store. The technology was developed at the Digital Innovation Lab in less than 3 months4). Moreover, CVS introduced Hold My Place in Line, allowing customers to get in line ahead of time and view wait times at their local MinuteClinic from their smartphone4).
Digital Tools
In November 2015, CVS announced the introduction of new tools from the Digital Innovation Lab. Based on research conducted at the Lab, pharmacy customers enrolled in digital programs demonstrate better medication adherence and reduced health care costs overall5). For instance, among CVS/Caremark members with chronic conditions such as hypertension, 10% more members improved their medication adherence to optimal levels after enrolling online at Caremark.com5).
The Lab used big data and analytics to uncover the most effective ways to help people become healthier, and accordingly developed 5 tools:
- Apple Watch Integration: the app is now Apple Watch compatible and help notify customers when prescriptions are ready
- Scan Paper Script: it is estimated that 1/3 of prescriptions are never filled – this tools enables customers to capture and send a photo of their prescription through the app
- Insurance Card Scan: this tool enables customers to share their new insurance information with pharmacists by taking a photo through the app
- MedRemind: this tool helps customers stay on track with their medication schedule
- In-Store Pharmacy Messages: customers who have the app will be notified if their prescription is ready for refill when they enter the store
“We have already started to see increased usage and adoption of our digital healthcare tools. In fact, one out of three CVS/Pharmacy customers use at least one or more digital tools.” Tizler4)
Going Forward…
CVS considers the Lab as a place to explore and diagnose projects to determine which ones should be fast-tracked to development3). CVS also partnered with top startup accelerators MassChallenge and Rock Health to drive innovation and is looking to partner with healthcare startups in order not to reinvent the wheel6).
I believe CVS can also move into the gamification and virtual reality space to incentivize people to adhere to the medical schedules. Just imagine if you could increase your personal HP level in a virtual game when you take your meds…
Another important aspect that CVS should focus on is the gathering and analysis of unstructured medical data. The medical data can be extremely valuable for research and monitoring purposes and it would be a shame to lose track of it because we don’t know how to process it.
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Endpoints
1) Statista – CVS Health’s Number of Stores from 2005 to 2015. Retrieved on November 15, 2016 from https://www.statista.com/statistics/241544/cvs-caremark–number-of-stores-since-2005/
2) CVS Website – CVS Health Opens Digital Innovation Lab in Boston. Retrieved on November 15, 2016 from https://cvshealth.com/newsroom/press-releases/cvs-health-opens-digital-innovation-lab-boston
3) Health IT Consultants – CVS Health Executive Talks Integration of Digital Health Tools for Pharmacy. Retrieved on November 15, 2016 from http://hitconsultant.net/2016/02/08/cvs-health-goes-digital-to-help-its-customers-get-a-handle-on-their-health/
4) Mobile Strategies 360 – Q&A with Brian Tizler, Chief Digital Officer of CVS Health. Retrieved on November 15, 2016 from https://www.mobilestrategies360.com/2016/05/09/exclusive-q-brian-tilzer-cvs-health
5) CVS Website – CVS Health Introduces New Digital Pharmacy Tools to Help Make Medication Adherence Easier and More Convenient. Retrieved on November 15, 2016 from https://cvshealth.com/newsroom/press-releases/cvs-health-introduces-new-digital-pharmacy-tools-help-make-medication
6) CVS Website – CVS Health Partners with MassChallenge and Rock Health. Retrieved on November 17, 2016 from https://cvshealth.com/newsroom/press-releases/cvs-health-partners-masschallenge-and-rock-health
Great post, Wis! I remember (I think) from the Catalina case that CVS was one of the biggest retailers that didn’t use Catalina’s products (in favor of an in-house version). Do you see many opportunities for CVS to use customer data and its app, in conjunction with coupons and other incentives, to encourage healthier behaviors? It would be really cool if, instead of just using customer data and coupons to claim greater value for itself and manufacturers, CVS decided to encourage customers to make healthier choices. Not sure exactly how they would do this and what kind of deals they would offer, but it seems like there’s a real opportunity to ‘create shared value’ here.
Thanks for the post, Wiss! Reading about CVS, like Ben, reminded me of the Catalina marketing case the indicated CVS didn’t use its point-of-sale technology. There may be regulatory or industry restrictions on offering coupons for prescriptions/pharmacy products, but I wonder if the CVS in-house point-of-sale technology was something that they work on in their innovation lab. I think the point-of-sale information could be helpful in providing additional convenience for customers. For example, if there are certain products that are typically purchased together with prescriptions, CVS might be able to use its MedRemind or In-Store Pharmacy Message tools to cross-sell products to customers or offer deals on complementary products as customers enter the store. I think your idea about gamification as a way to incentivize healthy behavior is an interesting one. Perhaps picking up prescription refills on time (or for a limited period ahead of time) could provide bonus points for the customer — this would align healthy customer habits (picking up prescriptions on time and therefore not running out) with efficiency in CVS operations (not having to hold inventory in the form of filled prescriptions waiting to be picked up).
Very nice post Wiss. The CVS approach to consumer health has certainly been an admirable one. It seems like they’ve taken stabs at each segment of the health care value chain in order to increase accessibility and affordability of health care for the general population. I think this is essential, especially in high friction services like primary care, which is constantly plagued by high wait times, costs, and inefficiencies. It would be interesting for CVS invest more in its primary care infrastructure and facilitate greater coordination with physician and hospital groups. Big data can be shared with consumers’ physicians in order to better understand health from a population and patient perspective. Advances in diagnostic technology can make it easier for customers to get rapid blood draws as part of every CVS visit, for instance, which can log important diagnostic information and relay this to patients. Even better – detection in vitamin deficiencies could immediately signals to the patient to purchase supplements in the store that day, leading to a more rapid, responsive health support system.