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Behind the CVS Health Rebranding Strategy

Christopher Cheney, for HealthLeaders Media

With a nationwide dearth of access to primary care services, CVS is in a prime position to compete in a basic segment of the healthcare provider market, says one observer.

September 8, 2014 – The rebranding of one of the nation’s largest pharmacy retailers last week is sending “new entrant” ripples through the healthcare industry.

Nasicent

“We’ve changed our company name to CVS Health to reflect our purpose of helping people on their path to better health,” officials at the company formerly known as CVS Caremark Corp. stated last week.

CVS Health officials say the rebranding effort helps align the company for an expanded role in providing healthcare services beyond the traditional retail pharmacy business model.

“As a pharmacy innovation company at the forefront of a changing healthcare landscape, CVS Health is delivering breakthrough products and services and enabling people, businesses and communities to manage health in more affordable, effective ways through programs in medication adherence, specialty pharmacy and delivery of care by walk-in medical clinics,” the company said.

In February, CVS announced it would pull all tobacco products from store shelves in recognition of the fundamental conflict between good health and smoking cigarettes. Last week, CVS officials told HealthLeaders that the simultaneous timing of the rebranding announcement and the actual pulling of tobacco goods from all 7,600 of the company’s stores was far from coincidental.

“The decision to remove tobacco from our stores underscores our role in the evolving healthcare system,” CVS said in a written statement. “Now more than ever, pharmacies are on the front lines of healthcare, becoming more involved in chronic disease management to help patients with high blood pressure, high cholesterol and diabetes. All of these conditions are made worse by smoking. Cigarettes have no place in a setting where healthcare is delivered. ”

CVS says its new brand complements its goals as a “new entrant” in the healthcare provider services market. “We are taking an active and supportive role in shaping the future of healthcare through our programs in medication adherence, delivery of care by walk-in medical clinics, and support of patients with chronic and complex conditions.”

CVS Health says it will offer:

  • Programs to help manage chronic disease
  • Programs to connect patients with pharmacists to help them stay on their prescribed medications
  • Digital capabilities to supplement those programs

It also plans to forge strategic alliances with physicians and health plans through both CVS/pharmacy and CVS/minuteclinic to provide clinical support, medication counseling, chronic disease monitoring, and wellness programs.

‘Colds, Lumps and Bumps’
A pair of healthcare industry branding experts gives CVS high marks for the company’s rebranding vision and execution.

“Great strategy is when it benefits you, and it benefits others as well,” says Jeff Hoffman, healthcare strategist at New York-based Kurt Salmon. “It’s a win for them and a win for the people who need the access.”

With a dearth of primary care services in the country, CVS is in a prime position to compete in a basic segment of the healthcare provider market, said Hoffman, who has worked with many providers on rebranding campaigns.

“The private-practice model doesn’t work anymore,” he said. “You can’t make money on $30 a visit. That failure of that model has created huge gaps in access to healthcare.”

Hoffman says affordable basic care clinics for “colds, lumps and bumps” at CVS stores will help individuals who for the first time have health coverage through the new insurance exchanges or Medicaid expansion.

For these patients, who face cost-sharing such as high deductibles for the most affordable HIX health plans, “using this type of alternative is very helpful,” Hoffman said. “Going to a CVS clinic where they charge $25 is pretty good.”

David Shultz, founder and president of Albany, NY-based Media Logic, said CVS officials have made a significant statement in their rebranding. “‘Health’ is an appropriate word to use in the name of their organization. They’re one of the largest [prescription] retailers in the US … one of the top pharmacy benefit managers…and they operate the nation’s largest chain of medical clinics: MinuteClinic,” he said in an email message last week. “Simply put, they’re a significant player in the healthcare space and, I think, they want to ‘mark their territory.'”

Schultz and Hoffman noted that timing the CVS Health rebranding with the removal of tobacco products from store shelves was a savvy marketing move.

“The removal of tobacco from stores was clearly going to get a lot of positive press, so why not leverage that exposure to say, ‘We’ve changed our name to CVS Health because we’re all about helping people stay healthy?'” Schultz said. “This was especially important because they’re not changing the store names, which means they needed another way to get this news in front of the consumer.”

“It was a stroke of genius to drop the cigarette sales,” Hoffman said. “They wanted to combine the pulling of cigarettes from their stores with the name change. … We’ll see over the next few years whether that makes them a more trusted healthcare partner for people.”

Retail Reality Check

In addition to helping to fill increasingly high demand for primary care services, Hoffman says CVS has powerful business motivations behind the company’s new-entrant ambitions.

“I’m not sure they’re being as magnanimous as they appear to be. They want people to come to their cold clinic; they want people to come into their stores to buy other products.”

Hoffman believes it is unlikely that CVS will make much money in the MinuteClinic business. It is costly for any organization to offer even basic primary care services, in part because nurse practitioners and other healthcare professionals come with high staffing costs.

“You end up with four FTEs of very expensive people who are going to serve people at 25 dollars. When you look at the total benefit to CVS, it’s a very good strategy for driving traffic to a store.”

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