Two years after the decision to pull cigarettes from their shelves, the pharmacy is still tackling health issues with its core business model.
An interview with Helena B. Foulkes by the Shared Value Initiative
Back in September 2014, CVS Health stopped selling all tobacco products in thousands of stores across America. It was a bold move, but one that was essential: The decision to stop selling an unhealthy product aligned perfectly with the newly rebranded company's core mission to improve health. "The long-term benefits will far outweigh the short-term cost," says Helena B. Foulkes, Executive Vice President, CVS Health, and President, CVS Pharmacy. In a sea of companies (including competitors) who continue to slave over quarterly earnings, CVS instead viewed this temporary tradeoff as a smart business decision for the future—one that is bringing in new customers, new business, and a healthier product portfolio.
The Shared Value Initiative recently sat down with Foulkes to discuss how CVS is reinventing the pharmacy industry beyond the tobacco decision. Foulkes will also take the stage with Fortune Editor-in-Chief Allan Murray and other corporate leaders to discuss business innovations that change the world on May 10, 2016 at the Shared Value Leadership Summit in New York.
[UPDATE] Foulkes gives her perspective at the 2016 Shared Value Summit on how purpose is affecting CVS's core business model, customers, and the new talent they hire:
To what extent and how are you seeing societal needs as a source of business opportunity for your company’s future growth and success?
Our purpose at CVS Health is helping people on their path to better health. For us, improving health is not only a noble mission—it’s our core business mission.
We fill or manage more than 1 billion prescriptions per year, and our 34,000 pharmacists, nurses, nurse practitioners and physician assistants make it easier for millions of Americans to obtain the medications and care they need, helping to reduce the $300 billion in avoidable costs due to medication non-adherence the U.S. health care system faces each year.
However, our health system remains stressed. Far too many Americans continue to lack insurance coverage and access to primary care. Many of them suffer from chronic diseases, which can be caused by unhealthy lifestyles. And care coordination across our health system remains a challenge.
A combination of bold action, innovation, and collaboration is needed to expand access to millions more Americans, help them live healthier lifestyles, and better manage their care.
CVS Health’s strategy is not simply to drive more store revenue or fill more prescriptions; it is to reinvent pharmacy to extend the front lines of care. That is the lens through which we make business decisions to drive future growth for CVS Health and drive improvements in health for our customers and communities.
What internal shifts need to be made to really deliver on your company’s intentions to create shared value? What changes have already been made? To what extent is your company organized to be able to execute shared value successfully?
Our company’s leadership team, led by President and CEO Larry Merlo, made a very intentional decision two years ago to stop selling tobacco in our retail pharmacies. Tobacco use is the leading preventable cause of disease and death in the United States, and selling it in our stores ran counter to our purpose and strategy. That same year, we changed our name to emphasize our commitment to better health.
The immediate short-term tradeoff in that decision was the loss of $2 billion in annual revenue. But we have also seen new customers in our stores, more health plans and employers interested in choosing the pharmacy benefit management side of our business, and tremendous goodwill from customers, health care providers, non-profits, elected leaders, and other stakeholders. The long-term benefits will far outweigh the short-term cost.
Following our tobacco decision, many customers asked why we weren’t also selling more healthy foods in our stores. We have made a major commitment to do that, putting healthy foods at the front of our stores and moving less healthy options to the back. The healthy alternatives have sold very well, even better than we expected.
We also have been collaborating with groups who share an interest in curbing tobacco use, including the American Cancer Society, American Lung Association, and Campaign for Tobacco-Free Kids. We are working with these and other groups to create the first tobacco-free generation. This includes a recently announced 5-year, $50 million commitment from CVS Health, consisting of both corporate and foundation dollars.
The tobacco decision was evidence of the biggest internal shift we have made at CVS Health, which has been to take an enterprise view of our business rather than to what is in the immediate interest of any one of our business units. That decision, for example, would have been much more difficult had we looked at it purely from a retail perspective. We are not just a retailer, however. We are a pharmacy innovation company that operates a retail pharmacy channel, among several others, including our retail MinuteClinics, which are partnering with health systems and other healthcare providers across the country to improve health and coordination of care for Americans.
The entire leadership team at CVS Health is committed to a customer-focused, enterprise mindset, and that is what enables us to take the long-term view, make decisions today that we know will help improve health over the long term, while remaining agile enough to quickly take advantage of opportunities in a fast-changing marketplace.
In the past 5 years, to what extent and how have your company’s relationships with stakeholders (government, NGOs, employees, consumers/customers) evolved to create more win-win opportunities for business and society?
We are very purposeful in looking for opportunities to leverage our company’s assets and our relationships with external stakeholders to further our purpose of improving health.
Our work to improve health in multicultural communities is a clear example of alignment between our business strategy, our corporate social responsibility strategy, and the interests of our communities and stakeholders. With more than 9,600 pharmacies and more than 1,100 in-store MinuteClinic locations across the United States—including a growing number of CVS y mas pharmacies, designed to provide enhanced, personalized service to the Hispanic community—we have become a one-stop community health resource for underserved, multicultural patient populations, including the African American and Hispanic communities.
Through an initiative called Project Health—or Proyecto Salud in Spanish—CVS Health hosts hundreds of in-store events each year to provide customers with a variety of free health-risk assessments, including screenings for blood pressure, body mass index, and glucose levels. In 2015, 750 events delivered more than $10 million worth of free health services to multicultural communities, reaching a significant number of uninsured or underinsured individuals. As part of these events, participants can learn about health coverage options available to them.
Another example of our work with multiple stakeholders is our response to the opioid abuse crisis. This national epidemic is a direct threat to our customers, stakeholders, and communities, and resolving it requires a multi-stakeholder approach. We are working hard to address the effects of prescription drug abuse and prevent it from affecting more lives, including raising awareness through youth prevention education, making life-saving opioid overdose-reversing medication more readily available at the pharmacy and encouraging safe medication disposal in collaboration with the Partnership for Drug-Free Kids and local law enforcement.
These initiatives are core to our purpose of helping people on their path to better health, and they tie directly to our Corporate Social Responsibility strategy, “Prescription for A Better World.”
At CVS Health, we believe that key to our long-term growth strategy is building lifelong relationships with our customers and the communities we serve, and being known as a company that puts a priority on health and genuinely cares about our customers. That is a true win-win-win proposition for our stakeholders, our shareholders, and our customers.