The CVS Challenge: Reimagining Healthcare While Growing Beyond its Drugstore Roots

December 3, 2021

CVS is at a crossroads. Buying Aetna in 2019 made CVS Health a diversified healthcare conglomerate delivering health insurance and prescription coverage to millions of people.

But the ground beneath its feet is shifting. The rising popularity of generic pharmaceuticals is pinching the profitability of its prescription drug business. Online competition is forcing the company to reinvent its brick-and-mortar operations. 

These challenges might give the impression that CVS would like to get out of the drugstore business. But that’s not how CVS Health CEO Karen Lynch sees it. “Our retail stores are fundamental to our strategy and who we are as a company,” Lynch said in a BBC report. “We remain focused on the competitive advantage provided by our presence in thousands of communities across the country, which complements our rapidly expanding digital presence.”

Yes, CVS Health plans to close 900 of its 9,900-plus U.S. stores in the next three years while expanding healthcare services in the remaining locations. But nobody’s giving up on drug stores — especially when CVS Health has thousands of them.  

Developing a New Kind of Drug Store

CVS was born in a single pharmacy in Lowell, Massachusetts, in 1963. Now the CVS brand is ubiquitous on busy intersections across the United States. The corners are bigger, and so are the corner drug stores. 

The ambitions of CVS Health are bigger yet. In recent years, the company has offered health insurance and prescription drug coverage to its drugstore customers. In years to come, it plans to add primary care to its suite of healthcare services. “We really believe that we need to kind of push into primary care so we can influence the overall cost of care,”  Lynch said in a conference call with financial analysts.   

Staying focused on the customer helped CVS grow into one of the biggest pharmacy chains in the United States over the course of a half-century. Lynch and her team’s strategy centers on staying in step with customers’ changing needs.    

“We are moving toward being a much more consumer-centric health-services, health-solutions company meeting the needs of consumers where they want to be met,” Lynch said in an interview with Bloomberg News

Investing $100 Million in Healthcare Technology

CVS Health sees technology as essential to serving its customers while bolstering its business. This underscores its creation of a $100 million fund to support early-stage startups trying to improve the accessibility and affordability of healthcare. 

“We have deep experience investing in innovative companies,” said Josh Flum, CVS Health’s executive vice president of enterprise strategy and business development. “We will build on this experience by providing capital to our start-up and venture partners and helping them scale more rapidly through commercial relationships with our business units.”

CVS Health brings much more than money to startup founders in the healthcare technology space. Its thousands of stores and millions of customers provide a proving ground that can separate good ideas from great ones. 

That could well prove to be the vital link between its drugstore past and its healthcare delivery future. 

Zipline is the operations technology platform built to solve the unique challenges of communication and task management across retail categories. Reach out to learn more about how your stores can deliver on your brand promise today and in the future.

Related News

See how Zipline helps keep today on track