Lynch brings passion for health care to new role

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CEO positions CVS Health to act as catalyst for change.

WOONSOCKET, R.I. — For Karen S. Lynch, health care is personal. On National Caregivers Day in late February, she shared some thoughts on LinkedIn about her aunt Millie, whom Lynch, when she was in her early 20s, looked after, and recalled the difficulties in navigating the complexities of the American health care system. “Ultimately, those frustrations led to my passion for health care,” Lynch wrote. “I was determined to improve a broken system and prevent others from feeling what I once did.”

Karen Lynch

Karen Lynch

Today, Lynch, who succeeded Larry Merlo as president and chief executive officer of CVS Health at the beginning of February, is intent on doing just that. “Our transformation over the last decade has enabled us to become the nation’s leading diversified health services company. As one of the most trusted brands in America, our presence in communities across the country allows us to meet consumers where they are and become a bigger part of their everyday health,” she says. “We will further develop and refine our strategy to leverage the rapid shift in health care under way in the U.S., a trend we are not only on top of, but in many cases driving.”

The value and effectiveness of the CVS enterprise — which includes 9,900 pharmacies; more than 1,100 MinuteClinics; 600 HealthHUBs; CVS Caremark, one of the nation’s leading pharmacy benefits managers; and Aetna, which provides health insurance coverage to 34 million people — has never been more apparent than during the COVID-19 pandemic. In addition to continuing to meet the ongoing health care and retail needs of Americans, the company was quick to step up and take on the challenge of coronavirus testing and immunizations. CVS has administered nearly 4.5 million COVID immunizations at skilled nursing, assisted living and other long-term-care facilities, and, as part of the Federal Pharmacy Partnership Program, it has started to provide the vaccines in stores across the country. The company is currently immunizing patients at some 1,200 stores in 29 states and Puerto Rico. Once adequate supplies are available, CVS Health is expected to administer between 20 million and 25 million COVID-19 vaccinations per month.

“There’s no more important work that we could be doing than what we’re doing today,” notes Lynch, who joined CVS Health in November 2018 when it merged with Aetna, where she served as executive vice president, CVS Health, and president, Aetna. “I couldn’t be more proud of my CVS Health colleagues and what they’ve been able to accomplish during these incredibly difficult times.

“This experience has really validated our strategy. We’ve reaffirmed during the pandemic what we’ve always known — health care is local. Being there in the community, providing easy access to care, affordability and simplicity, we’ve demonstrated our ability to help people on their path to better health. We’re shown that we will meet people where they want to be met — in the community, through our digital apps or in the home.”

Lynch says that as a result of its COVID testing and vaccination program, the company has started relationships with some 8 million people who were not previously CVS Health customers. In addition, the new Return Ready initiative to help employers and schools bring people back to their normal routines has thus far attracted more than 100 clients representing 1.5 million individuals.

The opportunity to solidify and build on those relationships bodes well for a company that is accustomed to generating strong financial results. For the year ended December 31, 2020, CVS Health posted net income of $7.19 billion, up 8.5% from fiscal 2019, on a 4.6% advance in revenue to $268.7 billion, the later figure putting the company fifth in the Fortune 500.

The most tangible manifestation of the company’s multifaceted approach is the CVS HealthHUB. Staffed by MinuteClinic providers licensed to treat about 80% of the conditions encountered by primary care physicians, the facilities offer a broad and growing range of acute and chronic care services, and do so in the convenience of a retail setting. The number of HealthHUBs in operation is set to rise from the current level of 600 to 1,500 within the next few years.

“The HealthHUBs are a pivotal part of our care model, one that helps us deliver care in the community,” Lynch says. “When you drill down into the HealthHUBs, you’ll see that we’ve designed a local care delivery team — a MinuteClinic provider, a pharmacist, a Care Concierge and, in some HUBs, we now have a behavioral health specialist — that can meet patients’ everyday health care needs.”

She is quick to add that CVS’ health care delivery assets extend well beyond HealthHUBs, MinuteClinics and retail pharmacies: “We have nurses who go to the home. We have a specialty business where people go to the home and provide infusion services. We have nurses that handle case management and telephonic care management. And then we have telehealth capabilities through our clinics. Bringing all those services together clearly demonstrates the power of our combined organization.”

Another major differentiator for CVS Health is the health care benefits business, the sector where Lynch first made her mark at Cigna Corp. and Magellan Health Services. The acquisition of Aetna gave CVS Health the chance to leverage assets across its portfolio to help both patients and payers achieve their objectives. Lynch has made it a priority to drive innovation in benefits design to make the most of that opportunity.

“As a result of the merger, we’ve been able to create offerings that allow people to lower their overall cost of care,” she notes. “We’ve implemented a zero co-pay or low-cost co-pay MinuteClinic benefit, which now reaches 6 million people. That translates into a more affordable way for people to access care. We’ve built new products like our Aetna Connected Plan with CVS Health that leverages the assets of our standard formulary, our infusion services, our MinuteClinics and our HealthHUBs.”

The Aetna Connected Plan with CVS Health, which debuted in greater Kansas City last August, melds the full range of CVS Health capabilities with Aetna’s cost-saving I-35 Performance Network. Lynch indicates that Aetna Connected Plan with CVS Health will be introduced in up to 15 more markets this year.

In addition to expanding that program, Aetna is setting the stage to once again offer policies to individuals under the Affordable Care Act. The move should enable the company to build on the success of its Medicare programs and other government businesses.

“After careful consideration, we have decided to reenter the individual public exchange market as of January 1, 2022,” Lynch says. “As the ACA has evolved, there’s evidence of market stabilization and remedies to earlier structural issues. It is now time for us to participate in these markets. We will show that we can bring great value to those who seek coverage.”

Lynch has wasted no time in taking steps to strengthen CVS Health’s already formidable management team. In recent weeks, Neela Montgomery was named president of CVS Pharmacy. At CVS Health Michelle Peluso became chief customer officer, and Laurie Havanec took over as chief people officer. All three bring new perspectives and new skills to the company, according to Lynch.

“Neela Montgomery comes to us with an impressive record in digital and e-commerce,” she says. “She oversaw the digital transformation of a 55-year-old brand [Crate & Barrel], she understands retail, and she understands the consumer. We brought her in for those capabilities. Michelle Peluso is our first chief customer officer. Her appointment reflects the fact that the customer is central to everything that we do, and we want to view everything through that lens.

“The last person I hired was Laurie Havanec. She’s known for driving a people-first strategy, and championing growth and innovation. And she is very passionate about diversity and inclusion. All three of them will bring some new thinking around our approach to the customer.”

The appointments, particularly those of Montgomery and Peluso, highlight the importance that CVS Health attaches to connecting the dots throughout its health care and retailing operations, a process that Lynch promises will accelerate.

“Digital has been an evolving journey for us,” she says. “We’ve been building out digital capabilities across each of our businesses and doing quite well. I would point to our digital tools in specialty pharmacy, which are quite strong and exceptional in the marketplace. The other thing I would point to is how rapidly we’ve enhanced these capabilities around scheduling, expertise that we used to great effect with COVID testing and now with immunizations.

“We need to continue to connect those digital experiences with in-person experiences. Our goal is to deliver personalized experiences for individuals, so that however they make their connections with CVS Health, they have all the relevant information available at their fingertips.

“The industry is changing. Technology and digital are critically important, and will become more so as we move forward. Telehealth will be critically important. During the pandemic we’ve seen growth in telehealth that we thought would take 10 years. Whatever trends emerge, we’ll be part of the solution.”

The burgeoning role of technological tools and e-commerce as sources of information, products and services calls into question the future of brick-and-mortar drug stores, and how they will evolve. As CEO of a company with almost 10,000 pharmacies, they are issues that Lynch has thought a lot about.

“Consumers will engage with the health care system in a variety of ways,” she notes. “So, as you think about pharmacy, it will continue to be a local, community-based delivery system — for both prescription drugs and many health services. If there’s one thing we learned in the pandemic, it’s that being in the community and being local is critically important. Things will evolve, and many of those changes will be driven by technology. But at the end of the day, our strategy will be to continue to meet people where they want to be met.”

The front-end business is one aspect of CVS Pharmacy that is taking on a new orientation, Lynch acknowledges. Consistent with CVS Health’s mission, she says, nonpharmacy merchandise will be increasingly skewed toward products that can make customers look and feel better.

Asked if CVS Health ever encounters conflicts between what’s best for the consumers it serves and what’s best for plan sponsors, Lynch indicates that she sees their needs as “one and the same.”

“When we’re talking to our institutional customers, it’s their employees and their colleagues that they are thinking about,” she explains. “Clearly we’re developing benefit strategies with their colleagues in mind.

“If you think about our business, we have a hundred million customers through our Caremark and Aetna businesses. That’s a hundred million people we touch every single day. We have an opportunity to really rethink and reimagine how we interact with those consumers, and help employers improve their workers’ health and lower costs. So for me, it has to be a comprehensive approach.”

Most payers have up to now taken a bifurcated view of health care benefits, putting medical and pharmacy coverage in separate silos. An unintended consequence of that approach is to limit the impact of a unified health care delivery model. Lynch indicates that CVS Health continues to gain momentum as it promotes its vision in the marketplace.

“Our clients are looking for ease of access, simplicity and lower overall medical costs,” she says. “When CVS Health and Aetna came together, the very first thing that we talked about was what we could do to address those issues. We went to market with an integrated medical and pharmacy offering. We also did things internally, combining some of our sales and administrative teams, so when we go to market, we are unified. I’m quite pleased with the way employers are thinking about that integration.”

She adds that payers are increasingly open to new ways to deliver care: “They are expanding their interest in other health services and solutions that companies can offer; things like our HealthHUBs are generating a lot of interest. The same is true with some of our at-home services they’re interested in, including home infusion and dialysis. They’re quite interested exploring things beyond medical and pharmacy benefits.”

CVS Health has stepped up and shown what it can do during the pandemic. The company’s goals in terms of access, quality and cost are aligned with those of payers and the Biden administration, and there is an urgent need to revamp the health care delivery model. If Lynch and her colleagues can realize their objectives, CVS could serve as a catalyst for meaningful change in health care across the United States.

“There’s power in this diversified health services company,” says Lynch. “When people think health, I want them to think about CVS Health, because we have all the products and services that they need — from insurance to pharmacy to pharmacy benefits. We offer a convenient way to address health care needs in the local community. We have comprehensive solutions at our fingertips to provide our consumers with access to high-quality care every day.”



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