Last week, CVS Caremark announced that it was pulling cigarettes and other tobacco products from its stores because it wanted to focus on becoming more of a health care provider, with CEO Larry J. Merlo stating, “We came to the decision that cigarettes and providing health care just don’t go together in the same setting.” And, while the retailer will lose about $2 billion per year as a result of the move, it stands to gain much more. Merlo said the decision to stop selling tobacco products “was really more of a discussion about how to position the company for future growth.”
CVS has the largest chain of pharmacy-based health clinics in the United States, offering care for common illnesses, like strep throat and pink eye (Bob Costas could benefit from a visit). By 2017, it anticipates growing clinic locations to 1,500. Retail health care is becoming big business with approximately 20 million patient visits to date and Accenture indicates that the industry could see 25% to 30% growth in the next few years. What about CVS’ move positions the retailer to take advantage of the opportunity?
- A perfect storm – there is a shortage of primary care doctors and more than 30 million new consumers are flooding the system under the Affordable Care Act. With a massive amount of media coverage related to their bold move, CVS has increased awareness and appeal to these potential patients. There is now significant pressure on CVS’ competitors to remove tobacco products from their shelves, but regardless of their response, CVS will always be seen as a leader as a result of this move.
- More appealing to partners such as hospitals – CVS partners with more than 30 different health systems across the country to help funnel patients into their referral networks. These partnerships lend additional credibility and enhance the retailer’s ability to provide care.
For consumers, what’s not to like? Retail healthcare is:
- Less expensive – According to a recent American Journal of Managed Care study, the clinics provide care that is 30% to 40% less expensive than care at a physician’s office and 80% less expensive than ED care. This is because clinics typically employ mid-level providers, such as nurse practitioners or physician assistants.
- More predictable for pricing – Retail clinics offer fixed, predictable prices. This is increasingly more attractive as consumers bear more of the cost of their own care.
- Convenient – Location and hours rank tops in surveys of how consumers select their primary care physician (following recommendations from family and friends). Retailers break the traditional primary care mold with extended hours and are generally open seven days a week. 90 percent of retail health care patients are walk-ins and the average appointment lasts less than 15 minutes. Adding to the convenience is the “one stop shopping” factor – see a health care provider, pick up your prescription, and don’t forget those tissues and cough drops. Oh, yeah, and can you get a gallon of milk?
Interestingly, while retail is going health care, health care is also going retail. In August 2011, the Mayo Clinic conducted an 18 month experiment and opened the “Create Your Mayo Clinic Health Experience” store at the Mall of America. The store sold Mayo Clinic cookbooks, offered wellness programs, and provided telemedicine services. Customers used 3-D computer monitors, kiosks, and “navigator specialists” to assess their health and develop wellness programs. The store emerged because of Mayo’s belief health care won’t be confined to hospitals and doctor’s offices in the future. The goal was to make things more convenient and provide access to Mayo’s leading health resources on a day-to-day basis.
While retail clinics like CVS certainly have their limitations, they have the opportunity to fill a real void and provide some disruptive innovation to traditional primary care. Critics attest that retail clinics are not supportive of the concept of a medical home and that patients may still have to go elsewhere if they have a condition that is beyond the scope of what they can handle. However, electronic medical records and partnerships with major health systems help to hurdle some of those challenges.
With the expected influx of newly-insured patients, it’s important to evaluate all the options to expanding access. A tobacco-free CVS might be just the right prescription for its patients and hospital partners.