When Elephants Dance: What CVS Can Teach Independent Pharmacies

Much was made of CVS announcing it would close 900 stores. That’s out of more than 9000. With their role in Covid testing and vaccination, some wonder about the strategy. Let’s just say, CVS has no plans to get smaller.

Forget snacks, shampoo and greeting cards; The future of pharmacy is healthcare.

Are you ready to get your primary care at a pharmacy? Either in person or online? From testing and diagnosis through prescription and delivery with virtual management and monitoring? 

My recent experience getting my booster vaccine at Walgreens where no system talked to another is indicative of how poor retail pharmacy systems can be. Often in corporate evolution, those with the bad systems never make the leap of pivoting while executing well on their current model. 

Nevertheless, traditional bricks-and-mortar pharmacy retailers, accelerated by the Covid pandemic, will need to adopt a hybrid model of sales and service delivery, and use innovative, direct-to-consumer platforms and apps to do so. There has been massive consolidation and integration of payer, pharmacy and now direct clinical service delivery in the past two decades. 

CVS hasn’t been just a pharmacy for many years. Retail players have been trying to take over direct patient care for two decades with limited sustainable success. Running a physician practice is different from selling stuff retail. 

The story of CVS, with the largest number of stores, is instructive. This elephant is learning to dance. And smaller independent pharmacies are well advised to follow its lead.

Through the years, CVS added Caremark Pharmacy Benefit Management services (PBM) in 2007 so they can control the relationship between third party payers and manufacturers and get a bigger cut of the medication spend.

And in 2017 they bought Aetna in the largest healthcare merger in history to become a more integrated payer-provider and control pricing at the health plan level. They went from double dipping to triple dipping at least.

The pressure of online pharmacy from True Pill, Amazon’s Pill Pack, Walmart, Capsule and others has forced rapid evolution in the slow-moving traditional pharmacy stores to look for ways to hold their markets and control retail distribution. 

Walgreens is looking to team up with VillageMD for primary care while Walmart has been testing various in store primary care services for over 20 years.

Pharmacists are keen to join the paid care team. For now, they are mostly excluded from direct payments for patient care services, though they can contribute through certain types of health plan arrangements and value-based payment schemes. Is Aetna working on this?

The pharmacist eCarePlan is one of the routes to integrating pharmacist-based care within the broader system of services while providing payment and integrating with existing care teams.

A larger strategy for CVS is to become the provider arm of Aetna, as Optum is for United Health. Traditional pharmacies are like a lot of old tech. Many will not make the transition to become care-centers, sell testing and follow up and other primary care.

CVS has good leadership and great assets. If anyone can make the transition, it’s probably them — along with Walmart and however Amazon ends up doing primary care. Of course, health systems and physician practices will still be available as well. 

Meanwhile, independent pharmacies must remain nimble with new online platforms and technologies to meet the changing expectations of today’s tech savvy patients.

I wouldn’t discount CVS. When it comes to this dancing elephant, the rest of the field must learn to be as nimble or get trampled underfoot.

Interested in increasing revenue and improving community outreach?

Contact Green Room Technologies and learn how your retail pharmacy can take advantage of emerging trends in epharmacy fulfillment and virtual health.  

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