There's a reason grocery stores keep milk in the back of the store: it's the most common thing people stop in to buy. If it's in the back, that means consumers have to walk by all the other bright, colorful aisles of product on the way to collect what they came there for.
Is CVS applying the same concept to health care?
According to Harvard Business School historian Nancy Koehn, the answer may be yes. She says American consumers are clamoring for a more straightforward way to navigate the complicated web of health care providers—and CVS is providing.
"Consumers want something different than they can get in our complicated, expensive $3 trillion dollar health care system," Koehn said. "They want medical care on demand, they want information on the web, and they want transparent pricing, which exists almost nowhere in traditional health care."
Meanwhile, walk into a CVS Minute Clinic today and you can fulfill a prescription, get your child vaccinated, get checked for an ear infection, and get a urinary tract infection test all in the same trip you took to buy sunscreen and paper towels (at the back of the store, of course.)
That didn't happen by accident. The company made waves last year when it decided to stop selling cigarettes, which had previously brought in $2 billion in revenue per year for the company. They also moved to buy out all of Target's in-house clinics and have moved into the prescription sourcing business as well. It's all part of a conscious effort to rebrand as a health care provider, Koehn says, not just the place you dash into to buy a last-minute birthday card or packet of Skittles.
"They truly are becoming a healthcare company that happens to sell potato chips, Revlon and other kinds of makeup, and beach chairs during the summer," she said.
So far, that bargain has been paying off. Last year, CVS posted a profit of $140 billion in sales, had 137,000 full-time employees, and was selling stocks at $109 per share.
"It's a fascinating story of business reinvention and business responsiveness," Koehn said. "It's a company to keep your eyes on."
To hear more from Nancy Koehn, tune in to Boston Public Radio above.
