How Aligning To Your Brand Purpose Can Drive New Growth Opportunities Recasting CVS for Health Care Growth
•
4 likes•872 views
How CVSHealth leveraged its new brand purpose to recast itself for greater synergy with profitable new healthcare opportunities and partners.
Recommended
Recommended
More Related Content
What's hot
What's hot (20)
Similar to How Aligning To Your Brand Purpose Can Drive New Growth Opportunities Recasting CVS for Health Care Growth
Similar to How Aligning To Your Brand Purpose Can Drive New Growth Opportunities Recasting CVS for Health Care Growth (20)
Recently uploaded
Recently uploaded (20)
How Aligning To Your Brand Purpose Can Drive New Growth Opportunities Recasting CVS for Health Care Growth
- 1. How Aligning To Your Brand Purpose Can Drive New Growth Opportunities Recasting CVS for Health Care Growth 06.05.2015
- 2. Agenda Today we’ll explore how CVSHealth leveraged its new brand purpose to recast itself for greater synergy with profitable new healthcare opportunities and partners. About CVS Recasting Factors: Acquisitions, Merger, The Affordable Care Act, New Brand Purpose Living the New Brand Purpose Financial Impact of the New Brand Purpose Future Growth Opportunities CVSHealth Facts 2
- 3. About CVS CVS, together with its subsidiaries, provides integrated pharmacy health care services in the U.S. 3 7,822 retail drugstores 860 healthcare clinics SOURCE CVS Pharmacy, http://en.wikipedia.org/wiki/CVS_Pharmacy. CVS Health Corporation, Yahoo Finance, http://finance.yahoo.com/q/pr?s=CVS+Profile Brand Purpose (2014) We strive to improve the quality of human life.
- 4. RECASTING FACTOR: ACQUISTIONS CVS’ Becomes “Your Neighborhood Health Service Provider” A clear strategic growth framework helped CVS forge a transformational path, moving away from your corner drugstore to a health services provider and positioning itself to capitalize on the 42M new health care consumers. SOURCE CVS Pharmacy, http://en.wikipedia.org/wiki/CVS_Pharmacy. CVS Health Corp., bloomberg.com /research/stocks/snapshot/snapshot.asp 1990 ACQUIRES Peoples Drug, expands new mid-Atlantic market, Washington, D.C., Pennsylvania, Maryland and Virginia 1994 LAUNCHES PharmaCare, a pharmacy benefit management (PBM) 1998 ACQUIRES Arbor Drugs, expands into MI 1999 ACQUIRES Soma, first online pharmacy 1997 ACQUIRES Revco stores, expands footprint to Ohio Valley and Southeastern US 2004 ACQUIRES Eckerd drugs stores and health services, pharmacy benefit management (PBM) business; expands into FL, TX 7/13/2006 ACQUIRES MinuteClinic, pioneer and largest retail-based health clinic 1/23/2006 ACQUIRES Osco, Sav-On Drugstores also includes Health'n'Home durable medical equipment (DME) stores; expands into Midwest and Southwestern U.S. 8/12/2008 ACQUIRES Long Drugs, expands in CA and HI 2000 ACQUIRES Stadtlander pharmacy, becomes largest U.S. specialty pharmacy 4 1990 1992 1994 1996 1998 2000 2002 2004 2006 20081990 1992 1994 1996 1998 2000 2002 2004 2006 2008
- 5. RECASTING FACTOR: MERGER Fall 2006, Merger with Caremark 5 During Fall 2006, Caremark Rx, a pharmacy benefits management [PBM] company, was facing fierce acquisition from Express Scripts, an opposing PBM. CVS/Pharmacy entered into the sale for Caremark RX, offering a cash/stock mix, board seats, and merged with CVS's existing Pharmacare PBM, becoming the nation’s largest pharmacy benefit management company. To reflect the merger of two equals, CVS changes it’s name:
- 6. RECASTING FACTOR: THE AFFORDABLE CARE ACT Affordable Care Act Creates New Health Growth Opportunities The Affordable Care Act made major changes to the health insurance: SOURCE CVS Pharmacy, http://en.wikipedia.org/wiki/CVS_Pharmacy. CVS Health Corp., bloomberg.com /research/stocks/snapshot/snapshot.asp 2010 2011 2012 2013 3/23/2010 AFFORDABLE CARE ACT (ACA) signed into law, includes Medicaid expansion, health insurance requirement. 42M more Americans have access to healthcare 6/28/2012 ACA UPHELD by U.S. Supreme Court 10/1/2013 HEALTHCARE.GOV opens 6 Minimum Standards for Plans Eliminated Pre-existing Conditions and Lifetime Limits Individual Requirement; Tobacco Surcharge Expanded Medicaid No Cost Preventive Care Services for Adults, Women and Children Extended Dependent Coverage to Age 26
- 7. CVS Caremark’s Brand Purpose Didn’t Capture the Company’s Health Focus Brand Purpose We strive to improve the quality of human life. Nationwide Retail Drugstores Health Clinics Nationwide Pharmacies Durable Medical Equipment CVS had moved beyond “Your Neighborhood Drugstore” yet it’s Brand Purpose didn’t clearly capture the company’s focus on improving your health. Specialty Pharmacy Pharmacy Benefit Management 7
- 8. RECASTING FACTOR: NEW BRAND PURPOSE New Brand Purpose Clearly States A Commitment to Health Our purpose Helping people on their path to better health. 8
- 9. LIVING THE NEW BRAND PURPOSE The $2B Aha Brand Purpose Moment: The Tobacco Decision “Put simply, the sale of tobacco products is inconsistent with our purpose.” – CVS President & CEO Larry J. Merlo SOURCE The Good and The Growth in Quitting, Larry Merlo, TEDxWakeForestU, https://www.youtube.com/watch?v=aM2ZtpqwYQs&list=PLvbq4puKKuEw20UM6aug-3AOmGkJ1i9zf&index=1. CVS Pharmacy, http://en.wikipedia.org/wiki/CVS_Pharmacy. CVS Health Corp., bloomberg.com /research/stocks/snapshot/snapshot.asp 9 2012 2013 2014 2/5/2014 ANNOUNCES it will Stop Selling Tobacco Products 6/28/2012 ACA UPHELD by U.S. Supreme Court 10/1/2013 HEALTHCARE.GOV opens 4/1/2014 8M more Consumers have healthcare coverage as a result of ACA CVS Tobacco Sales $2B in Sales $300M in Profit
- 10. Announcement Sends A Clear, Purposeful Message – “We’re Committed To Bettering Health Care” CVS’ move to stop selling tobacco products sent a clear purposeful message to consumers clarifying the company’s purpose and differentiating itself from its competitors and giving CVS a unique opportunity to increase sales. 81% CVS and Non-CVS shoppers Were Aware of the CVS’ Action 76% Agree Decision will have minimal impact on their shopping behavior 58% Agree Decision helps me better understand the company’s mission and purpose SOURCE Why CVS May Not Get Burned by Its Tobacco Decision (Part 1), March 18, 20914. http://www.gallup.com/businessjournal/167870/why-cvs-may-not-burned-tobacco-decision-part.aspxGallup. Gallup results are based on a Gallup Panel Web study completed by 5,550 national adults, aged 18 and older, conducted February 14-21 53% Agree Decision helps me understand what makes CVS different from its competition 10
- 11. September 2014: Changes Name to CVSHealth to Reflect the Company’s Broader Health Care Commitment “For our patients and customers, health is everything and CVSHealth is changing the way health care is delivered to increase access, lower costs and improve quality,” announced Larry J. Merlo, President and CEO, CVSHealth. SOURCE CVS Caremark Announces Corporate Name Change to CVS Health to Reflect Broader Health Care Commitment, Sept. 3, 2014, http://www.cvshealth.com/newsroom/press-releases/corporate-info-events/cvs-caremark-announces-corporate-name-change-cvs. 11
- 12. New Brand Purpose Created New Growth Opportunities – “Your Neighborhood Retail Health Clinic” About 16.4 Million people have gained health insurance coverage since the Affordable Care Act became law nearly five years ago, according to recent government estimates. SOURCE New Obamacare Numbers: 16.4 Million Covered, http://www.cnn.com/2015/03/16/politics/obamacare-numbers-16-million-insured-rate. MinuteClinic programs and services, http://www.cvs.com/minuteclinic/services. New Health Service Programs Monitor and manage health conditions Expanded Health Services ACA covers preventive care at no cost to the consumer 12
- 13. CVSHealth Launches New Smoking Cessation Program Helping Thousands Quit Millions of Consumers received smoking cessation information at CVS/pharmacy and online Smoking cessation counseling at CVS/pharmacy and MinuteClinic helping thousands of patients to quit for good. Sept 2014 Launches Smoking Cessation Program • Counseled more than 67K patients filling a 1st RX for smoking cessation • Consulted with thousands more smokers seeking advice about over- the-counter nicotine replacement products (NRT) CVS Pharmacists Counseled & Consulted Consumers Prescriptions for smoking cessation medications have increased by 63 percent on a monthly basis in the timeframe and visits to MinuteClinic for smoking cessation counseling were up 61% compared to the prior eight months. 63% Increase in Smoking Cessation Medications Purchases of these products increased 21 percent in September through December over the previous four months. 21% Increase in Over-the- Counter NRT products SOURCE CVS Health Announces Data from Smoking Cessation Outreach on One-Year Anniversary of Decision to Stop Tobacco Sales. Marketwatch.com, Feb 5, 2015. http://www.marketwatch.com/story/cvs-health-announces-data-from-smoking-cessation-outreach-on-one-year-anniversary-of-decision-to-stop-tobacco-sales- 2015-02-05 13
- 14. FINANCIAL IMPACT OF NEW BRAND PURPOSE Going “Cold Turkey” Turns Out To Be Profitable Even without the $2B in sales of tobacco products, CVS managed profitable growth due to strong growth in its pharmacy services segment, including the company’s pharmacy benefit management company. 2014 Q3 4.5% ↓ Front-of-Store Sales* 15.7% ↑ Pharmacy Services 9.7% ↑ Net Revenues ahead of analysts’ expectations by more than $250M *Excluding tobacco and the estimated associated basket sales, front-store same-store sales would have been approximately 480 basis points (bps) higher for the three months ended September 30, 2014 and 2013. 2014 Q4 7.2% ↓ Front-of-Store Sales* 21.7% ↑ Pharmacy Services 12.9%↑ Net Revenues *Front store same store sales would have been approximately 800 basis points higher if tobacco and the estimated associated basket sales were excluded from the three months ended December 31, 2014 and 2013 2014 Full Year Results 1.2% ↑ Net Income, $4.6B 9.9% ↑ Net Revenues 13.5% ↑ Adjusted EPS, $4.49 $139.4B Record Net Revenues $3.6B Net New client business SOURCE CVS Health Reports Strong Profit Growth For Full Year 2014; Fourth Quarter Adjusted EPS At High End Of Company's Expectations. Marketwatch.com Feb 10, 2015. http://www.marketwatch.com/story/cvs-health-reports-strong-profit-growth-for-full-year-2014-fourth-quarter-adjusted-eps-at-high-end-of-companys- expectations-2015-02-10 14
- 15. FUTURE GROWTH OPPORTUNITIES CVSHealth Becomes Health Management Company CVS has continued it’s health care expansion through clinical affiliations and continued acquisitions, becoming a full-service health management company. SOURCE CVS Caremark Announces New Clinical Affiliation with MedStar Health,Aug. 27, 2014, http://info.cvscaremark.com/newsroom/press-releases/cvs-caremark-announces-new-clinical-affiliation-medstar-health. CVS Health Announces New Clinical Affiliations with Leading Louisiana and Kansas Regional Health Systems, Jan. 28, 2015, http://www.cvshealth.com/newsroom/press-releases/corporate-info-events/cvs-health. CVS Caremark Completes Acquisition of Coram Infusion Business from Apria Healthcare, Jan. 17, 2014, http://www.cvshealth.com/newsroom/press-releases/pharmacy-services-corporate-info-events/cvs-caremark-completes- acquisition. CVS Health Agrees to Buy Omnicare in $12.7 Billion Deal, http://www.nytimes.com/2015/05/22/business/dealbook/cvs-health-agrees-to-buy-omnicare-in-12-7-billion-deal.html?_r=0 15 Expands into Infusion Services Acquired Coram for specialty infusion and nutritional services. CVS can better manage the cost of specialty drugs, including infused therapies. Patients get better clinical outcomes, payers see lower total health care costs. Clinical Affiliations Enhancing access to high quality, affordable care with 50 major health systems and health care providers across the country, including: LSU Healthcare Network in New Orleans, LA. Shawnee Mission Health, KS. MedStar Health, health care system Maryland and Washington, DC, region. Expands Prescription Distribution In May 2015, it acquired Omnicare, a distributor of prescription drugs to long-term care industry. Acquisition broadens CVS’ presence in in the specialty pharmacy business, a booming sector of the industry. Creates new opportunities for CVS to extend high-quality, innovative pharmacy programs to a broader population of seniors and chronic care patients as they transition across the care continuum.
- 16. CVSHealth Facts (2015) SOURCE CVS At a Glance, http://www.cvshealth.com/about-us/our-purpose/cvs-health-glance. 16 31 Specialty Pharmacies that support individuals who require complex and expensive drug therapies. 200,000 Colleagues Employed in 46 states, the District of Columbia and Puerto Rico. Largest U.S. Pharmacy Based on Total Prescription Revenue It’s retail pharmacy and pharmacy services businesses accounted for 22.6% of the nation’s total prescription revenues in 2013, according to the 2013-14 Economic Report on Retail, Mail and Specialty Pharmacies. 68,000 Retail Network Pharmacies Maintains a national network of nearly 68,000 retail pharmacies, including its CVS/pharmacy stores. 25M MinuteClinic Patient Visits (as of May 12, 2015) Its CVS/Minuteclinic nurse practitioners have seen more than 25M patients to date, with a 95% customer satisfaction rating. 70M Active ExtraCare Member Households Its loyalty card program, ExtraCare, is the largest retail savings and rewards program with more than 70M active member households. ExtraCare is also the vehicle for offering its customers value and a personalized shopping experience. 900 MinuteClinic Locations in the U.S. CVS/Minuteclinic has more than 900 locations in 31 states and announced plans to have a total of 1,500 clinics by 2017.
- 17. How Aligning To Your Brand Purpose Can Drive New Growth Opportunities Recasting CVS for Health Care Growth 06.05.2015
Editor's Notes
- Good [morning, afternoon]. Today, I’d like to review with you a tangible example of how a company – CVS – can live by its values and align around it’s brand purpose to recast the company for new growth opportunities in health care
- TALKING POINTS CVS grew out of Rye New York retail holding company, the Melville Corporation (which was founded in 1922) CVS at one point stood for Consumer Value Stores and at another point stood for Convenience, Value and Service. Today, CVS is a Fortune 50 Company. Provides integrated pharmacy health care services in the United States. And does that through nearly 8,000 retail drugstores and 900 healthcare clinics.
- TALKING POINTS Starting in 1990, CVS set out on a clear strategic growth framework. Acquiring competitors to extend its retail reach across the country and adjacent health care entities to become a health service provider. A few key highlights 1997 acquires Revco stores, expanding into the Ohio Valley and Southeastern U.S. 1999 acquires Soma, the first online pharmacy 2000 acquires Stadtlander pharmacy, and become the largest Specialty Pharmacy in the U.S. 2004 acquires Eckerd; expanding CVS pharmacy benefit management business, and Health Services 2006 saw more activity Acquires Osco, Sav-On-Drugstores moving into Durable Medical Equipment stores Acquires MinuteClinic and moves into the health services delivery area Merges with Caremark RX, expanding its PBM business
- TALKING POINTS A merger of two equals The merger with Caremark was another critical factor in recasting CVS – making CVSCaremark the nation’s largest pharmacy benefit management company. The next major factor in CVS’ recasting was the passage of the Affordable Care Act
- TALKING POINTS The Affordable Care Act (ACA) made major changes to the health insurance and put more focus on prevention and wellness and ushered in new insurance requirements like: Individual requirement, with tobacco surcharge. Free Preventive Care that covered exams and wellness, Extending Dependent Coverage to Age 26; Expanding Medicaid to name a few. Two requirements are key here: the Individual insurance requirement with tobacco surcharge and the Free Preventive Care. The expansion of healthcare and the new insurance requirements meant more Consumers had access to free prevention and wellness more specifically tobacco cessation programs. At the time of the ACA, about 45 Million Americans still smoked.
- TALKING POINTS If we take a step back and look at what CVS had assembled and how it changed it’s business. Clearly moved beyond “your neighborhood drugstore” Much more than it’s brand purpose: We Strive to Improve the Quality of Human Life
- TALKING POINTS CVSCaremark changes brand purpose to better align around the company’s new focus – health services provider – and its commitment to health care Previous brand purpose: We strive to improve the quality of human life.” NEW brand purpose: “Helping people on their path to better health.”
- TALKING POINTS Like a lot of companies, CVSCaremark faced some contradictions and inconsistencies between products it sold, its commitment to bettering health and its new brand purpose, as their CEO points out: ((clip))
- TALKING POINTS CVS’ message – stop selling tobacco products – resonated with Consumers – 81% of surveyed consumers were aware of the action Message was clear and purposeful. Message clarified company’s purpose Message differentiated CVS from the national competitors like Walgreens, RiteAid, Cardinal Health, Target, Walmart and the numerous regional chains. Message didn’t’ really change Consumer’s shopping behavior
- TALKING POINTS CVS Caremark took another step to align itself to its purposeful mission– guiding people along the path of better health – to CVSHealth.
- TALKING POINTS ACA put more focus on prevention changed health care plans, ushering in free preventive care services for Adults, Women and Children. A few of free preventive care services include: contraception; Immunizations; Blood Pressure, Cholesterol, Type 2 Diabetes screenings and programs The ACA’s individual health insurance requirement – and surcharge for tobacco use – is a huge opportunity to provide millions more smokers with the help they need to quit. On May 2, 2014, the U.S. Departments of Health and Human Services, Labor and Treasury issued guidance on insurance coverage of tobacco cessation as a preventive service: Private group plans (large and small groups) Individual private plans Plans offered through State Health Insurance Marketplaces Alternative Benefit Plans are ALL required to cover tobacco cessation as a preventive service
- TALKING POINTS CVSHealth saw the opportunity to help the 45 Million Americans who still smoke, quit with their help … and launched their Smoking Cessation program in the fall of 2014. Their program has been successful (Sept 2014 thru Dec 2014) CVS pharmacists counseled more than 67,000 patients filling a first prescription for a smoking cessation drug or prescription nicotine replacement therapy (NRT) CVS pharmacists consulted with thousands more smokers seeking advice about over-the-counter NRT products. Prescriptions for smoking cessation medications have increased by 63% on a monthly basis in the timeframe Visits to MinuteClinic for smoking cessation counseling were up 61% compared to the prior eight months.
- TALKING POINTS CVSHealth’s move to give up revenue in the short term – tobacco product sales – for a greater long-term sustainability and success was a good move. Initially, the move drove a drop in the front-of-store sales But CVSHealth’s pharmacy business made up for that drop and them some The move is a clear example of a how a company – CVSHealth – can carry out the company’s vision to increase the value of the company live by its values, demonstrate commitment to those values by aligning around it’s purposeful position And bring about greater synergy with profitable new healthcare opportunities and partners.
- TALKING POINTS CVSHealth continues to expand in the health and medical space. Through Clinical Affiliations with more than 50 major health systems and providers across the country AND continued acquisitions of companies with adjacent health services, CVSHealth has moved beyond being your neighborhood retail health clinic to Your Neighborhood Medical Clinic, the one place you can go for preventive health services and screenings, health programs – like tobacco cessation – to infusion services.
- Just some facts about CVSHealth
- Good [morning, afternoon]. Today, I’d like to review with you a tangible example of how a company – CVS -- can live by its values, demonstrate commitment to those values and how that move – aligning around it’s purposeful position -- can bring about a new business model and new growth opportunities.