Many of you know I have a couple of adjunct professor positions at the University of Memphis. I have taught for over 15 years and also founded my healthcare management and consulting business almost 12 years ago.
My favorite course to teach is strategic planning, a requirement for all graduating business seniors. I do not require a text book and all our work and case studies are done over the internet, so we can get up to date information and case studies.
I think if the opportunity arose, this course would be a great one for physicians. As you read this article, you will see why I make this comment.
Almost all the physicians I know dislike the phrase, “walk-in clinics.” (It’s like a four-letter word.)
I have studied most of the walk-in clinics and found the CVS model to be the most interesting and the one which will most likely have the greatest impact.
So many times the words “strategic thinking and planning” are used together when they are different.
I came across a very interesting word recently: “tautology.” A tautology is an explanation that uses the same or similar terms to explain what it means, like calling strategic planning a process that creates strategies. Dr. Jeanne M. Liedtka, is a faculty member at the University of Virginia’s Darden Graduate School of Business and former chief learning officer at United Technologies. Dr. Liedtka says, “strategic intent provides the focus that allows individuals within an organization to marshal and leverage their energy to focus attention, to resist distraction, and to concentrate for as long as it takes to achieve a goal.”
The concept implies both having an overarching goal or direction, and making that goal a conscious focus or, “the act of turning your mind toward” an outcome or object.
Also,the intent to change -- a change that we are completely passionate about, that channels our every action for the future.
While you might be an expert in interpreting the particular “business ecosystems” in which you operate, how well do you understand what is happening culturally or politically that might also influence your future?
Liedtka suggests strategic thinkers ask this question: “Having seen the future that we want to create, what must we keep from our past, lose from that past and create in the present to get there? You learn from the past and use that learning to make predictions. You look at the present to assess the gap between where you are now and where you want to end up. While your focus is always on the future, you can only act in the present.”
SWOT analysis (strengths, weaknesses, opportunities, threats) never ends for strategic thinkers. Strategic thinkers are able to spot and react to great opportunities as they arise. They understand that the world is dynamic and they are open to change to reach their vision.
Dr. Liedtka says, “strategic thinking mirrors the scientific method…it is both creative in nature.” As strategic thinkers, we create hypothesis, those questions that start “what if…? or “If… then?-- questions that enable us to imagine multiple scenarios, analyze them as best we can based on the knowledge we’ve accumulated and then test the best hypothesis (experiment). As we act, we learn from our experience to create new hypothesis for future action.
CVS, arguably the nation’s biggest healthcare company, has ambitious plans. And tobacco doesn’t fit in them. With 7,800 retail stores and a presence in almost every state, CVS Health has enormous reach. Although shoppers might think of CVS as a place to pick up toothpaste, Band-Aids or lipstick, it is also the country’s biggest operator of health clinics, the largest dispenser of prescription drugs and the second-largest pharmacy benefits manager. With close to $140 billion in revenues in 2014 and about 97 percent of that from prescription drugs or pharmacy services, CVS is arguably the country biggest healthcare company, bigger than the drug makers and wholesalers, and bigger than the insurers.
Even before the Affordable Care Act created millions of newly insured customers in the nearly $3 trillion healthcare industry, CVS saw there were more profits to be made handling prescription drugs than selling diapers. But their transformation from drugstore to a healthcare company began a decade ago.
CVS already has more recently taken on a new advocacy role, that of public enemy of cigarettes. But with smoking rates on a steady decline, and cigarettes sales slumping, CVS also saw that future profits lie not with “Big Tobacco” but in health and wellness.
Larry Merlo, the CEO of CVS Health, is a former pharmacist and came into the company when it bought People’s Drug. Merlo said, “Hypertension, diabetes, osteoporosis, it’s the same story -- people don’t take their medications as prescribed. Pharmacists, who see patients more frequently than doctors do, can make sure patients stay on their drug regimens, keeping them out of the hospital and saving the healthcare system billions of dollars down the road.”
The shift toward healthcare started in 2004, when CVS acquired Eckerd Stores and Eckerd Health Services, giving CVS a foothold in administering drug benefits to employees of big corporations and government agencies. Two years later, CVS acquired MinuteClinic, a pioneering in-store health clinic chain that was offering treatment for routine illnesses, basic screenings and vaccinations. CVS also expanded its highly profitable specialty pharmacy business, which focuses on expensive drugs that treat complex or rare diseases like cancer or HIV. It acquired Coram for $2.1 billion. Coram is a business that allows CVS to dispatch technicians to patients’ homes to administer pharmaceuticals through needles and catheters.
And the acquisitions just keep on coming.
The growth of CVS comes at a time when the way Americans access and pay for healthcare is evolving quickly.
Merlo said, “Say you have diabetes, and you go into a pharmacy to get your insulin, how great is it if, in the same aisle, there’s a cookbook for people with diabetes? And there are some foods that are already approved for you, and a place to check your feet, and a clinician to check your eyes.”
“Consumers are saying: I want all of that at a place near my house that’s open on Saturdays, when it’s convenient for me. I want that place to post prices. It’s in CVS’s interest to pull in more and more pieces of the puzzle.”
A typical CVS clinic brings in $500,000 a year representing just a fraction of CVS’s revenue; still the clinics are an important part of the company’s healthcare proposition. CVS is by far the leader. Wal-Mart has fewer than 100 clinics, compared with more than 900 in CVS’s portfolio. Walgreens, the second-largest, has half as many as CVS. And CVS plans to add more clinics reaching 1,500 by 2017, the company has said.
A study by the researchers at the RAND Corporation estimated that more than a quarter of emergency room visits could be handled at retail clinic and urgent care centers, creating savings of $4.4 billion a year.
Helena B. Foukles leads CVS’s retail business said, “Customers quickly made the leap.” Foulkes pointed to a prominent snack corner at the front of one of the stores.
“What you’ll see in our stores are brands that convey healthy without being edgy. Its Chobani yogurt, its KIND bars its lots of proteins and nuts.” At this point, there are no plans to stop selling high-fat or high-sugar snacks. But those things might be harder to spot in a CVS store.
When asked where the Oreos were, Foulkes smiled. “You’ll find them, but you’ll have to look for them.”
Bill Appling, FACMPE, ACHE, is founder and president of J William Appling, LLC. He is a national speaker, presenter and a published author. He serves as an adjunct professor at the University of Memphis and is on the boards of Hope House and Life Blood. For more information contact Bill at j.william.appling@outlook.com.