Lynch maintains visionary legacy at CVS

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As Karen Lynch nears the end of her first year as president and chief executive officer of CVS Health, it’s clear that she is intent on extending the legacy of growth and innovation that has been a hallmark of the company for more than three decades. Speaking at CVS’ investor day in New York City last month, Lynch and other members of the management team outlined a strategy that calls for the company to expand the scope of health care services on offer and develop assets that make it a major force in physician-provided primary care.

Karen Lynch

Karen Lynch

Ambitious goals are nothing new for a company that has succeeded in transforming itself from a regional drug chain into the largest diversified health solutions company in the country, ranking No. 4 in the Fortune 500 list, with estimated revenue for 2021 of $290 billion. The process began in 1990, when CVS purchased 500 stores from People’s Drug, expanding its operations from New England into the Mid-Atlantic States. A succession of other retail acquisitions — Revco, Arbor, Sav-on/Osco and Longs among them — ensued over the next two decades, making CVS one of the two premier players in the national drug store market.

If CVS was unusual in the number and scale of the retail acquisitions it made, such deals were commonplace in the industry. A decisive moment came in 2007, when the company merged with Caremark Rx Inc., a leading pharmacy benefits manager. (The move was foreshadowed by the purchase of MinuteClinic, an in-store health clinic operator, a year earlier.) The addition of Caremark decisively altered CVS’ business model, enlarging its horizons from community pharmacy to the health care system as a whole. The acquisition of health insurer Aetna in 2018 further accelerated the company’s drive to extend the continuum of care.

Lynch and her colleagues have set about building on that foundation.

“As we look at the opportunities in health care, we’re focused on care delivery, expanded health services and products and digital health and wellness,” Lynch told investors and financial analysts. “And across the entire system, many companies are out there offering solutions that address individual pain points, but no one is bringing them together in a leveraged way. We can.

“The market is ripe for change that only we can deliver. And to capitalize on these broader market opportunities, we’re making several bold pivots in our strategy. These pivots leverage our existing assets and businesses that already give us a personal relationship with the consumer.”

The strategy includes the rationalization of the company’s store base. In addition to the previously announced closure of about 900 outlets over the next three years, remaining stores will be positioned as health care destinations in one of three formats — advanced primary care centers, HealthHUBs or traditional CVS pharmacies.

What goes on in the stores will be complemented by a digital‐first approach that augments the company’s reach and engagement with its more than 35 million online members, and also involves the launch of consumer‐centric services that Lynch says will enhance the customer experience. In addition, CVS’ omnichannel health services will be bolstered to better meet the needs of consumers whenever and wherever they choose. In pharmacy, the omnichannel strategy will bring about integration across all fulfillment channels in an effort to deliver personalized and seamless interactions.

The most significant departure is the plan to quickly increase CVS’ presence in primary care, a process that Lynch acknowledged will require new partnerships and acquisitions. She pointed out that while primary care accounts for just 10% of health care spending, it has a huge impact on utilization of other heath care resources.

“We will further build out our primary care offering to guide consumers on the care continuum to the sites and the providers that meet their needs,” Lynch explained. “A hallmark of primary care is owning the longitudinal relationship with the patient. Consumers are seeking this type of relationship. We can be at the center of their care.

“The traditional relationship is between the patient and the doctor. We’re going to shift the model to be centered around the patient with a multidisciplinary care team that all work together. The team will be led by a physician and include nurses, social workers, pharmacists and other health care practitioners.”

The approach to primary care envisioned by CVS is designed to pave the way for risk‐based reimbursement models and value‐based care, areas where the expertise of Caremark and Aetna can be brought to bear.

Determined to foster the next big evolutionary step in CVS’ business, Lynch and her team are likely to serve as a catalyst for improving health care and the consumer experience.


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