CVS Wants to Be Your Doctor’s Office

12 minute read

In the Fifth Season of Curb your Enthusiasm, Larry David visits a pharmacist to fill his father’s blood-thinner prescription. “You know, there’s another drug on the market that I personally like a lot better,” the pharmacist tells Larry. “But the doctor prefers this one?” Larry says. He holds up his hands like a scale and weighs his options. “Doctor,” he says, holding up one hand, then “pharmacist,” holding up the other. He decides: “I’ll go with the pharmacist.”

You may too if Larry Merlo has his way. Merlo, 59, is the CEO of drugstore giant CVS Health. Trained as a pharmacist himself, Merlo has ambitions to play a much bigger role in your health care. He’s already pretty involved. Last year at 7,800 stores, CVS, the second largest drugstore chain in the U.S., filled more than 700 million prescriptions and administered 5 million flu shots–all while selling customers everything from groceries to gift wrap.

Now Merlo says the drugstore can do more. In his vision, CVS will leverage its sizable MinuteClinic business–which already has 970 locations–to diagnose patients, decide on treatments and then sell them the pills they need to get well. In its role as the pharmacy-benefits manager for some 65 million people, CVS also negotiates the price of those pills and helps decide which ones get reimbursed under various insurance plans. Merlo would also like America to stop smoking: he roiled the tobacco industry last year by dropping the sale of cigarettes in CVS stores. And if that causes some customers to have withdrawal pains, the CVS pharmacy can fill a prescription for a drug that helps them quit.

By taking on more of the role of your doctor as well as that of your druggist, CVS looks to grow beyond its already considerable size ($4.6 billion in earnings for 2014). But Merlo argues that the stakes are far higher. He thinks CVS can save lives–and hundreds of billions of dollars in unnecessary health care costs annually–by efficiently treating Americans’ routine sniffles and aches, nudging them to take better care of themselves and making sure they take their medications when they’re supposed to.

Regardless of whether getting a strep test along with a quart of milk appeals to you, many health experts say Merlo may be on to something. The Affordable Care Act–Obamacare–is driving America’s health system to widen access to care while reining in costs. That’s stoking fears that doctors will be scarce and patients will pay more out of pocket–but it’s also spurring innovation, with doctors and entrepreneurs experimenting with all kinds of new approaches, including new kinds of primary-care practices. (See “Medicine Gets Personal” in TIME’s Dec. 29, 2014–Jan. 5, 2015, issue for one example.) Against that backdrop, it isn’t much of a stretch to reimagine the corner drugstore as a health care store. And there’s no question Merlo’s plans are drawing attention: that was his mustachioed face a few seats from Michelle Obama at the State of the Union address on Jan. 20.

Merlo says America’s changing system will lead to the “retailization” of health care, a fancy way of saying that patients are becoming more like consumers and that health care is becoming more like any ordinary consumer product. But if that’s so, the consumers will need to become as savvy about shopping for a checkup as they are about the shampoo and snacks that CVS sells–and they may wonder if they want to take medical advice from a company deeply embedded in the sale of prescriptions. In other words, are they really ready to go with the pharmacist?

The List-Price Checkup

On a recent Friday at the CVS MinuteClinic in Woonsocket, R.I., the doctor isn’t in. The doctor is never in at a MinuteClinic; patients are seen by a nurse practitioner, a health care professional with a graduate degree, advanced training and the ability to prescribe medications. The nurse practitioner on duty at the moment is a young woman in a white coat named Amelia Pires. She sees patients ranging in age from 18 months–the minimum at MinuteClinic–to the elderly, and she treats dozens of conditions, from mononucleosis and shingles to ear infections, for an average price of $89. Or less if, like those of the majority of patients, the visit is covered by insurance.

Retail clinics got their start in the early 2000s as places for the uninsured to purchase basic health services, and they’ve become an easy option for a flu shot and a familiar sight everywhere from drugstores like CVS and its competitors to big-box outlets like Walmart. Now, with the ranks of the insured growing in the Obamacare era, they’re evolving to fill a different kind of need. They offer convenient after-hours visits for patients who can’t get in to see their doctors; they also serve as triage centers that can handle minor illnesses for patients who don’t have a primary-care doctor, for hundreds of dollars less than it would cost in the emergency room.

For the insured, they offer a particular type of bargain. Plans with high deductibles that require substantial initial out-of-pocket payments are becoming more popular. MinuteClinic offers routine treatments at a lower cost than the average physician. Thanks to posted prices, what you see is what you pay: $59 for a kids’-camp physical, for instance, or a maximum of $99 for flu symptoms. The underlying economics are simple to understand: according to the Bureau of Labor Statistics, the median salary for nurse practitioners and physician assistants in the U.S. is $90,000; for medical doctors in family practice, it’s more than double that.

Though they still account for a small share of patient visits–MinuteClinic expects 5 million to 6 million visits in 2015, compared with nearly 600 million outpatient visits to physicians’ offices and nearly 100 million to the ER–they are growing in popularity. And CVS is doubling down on the strategy. Its 970 clinic outlets are already more than twice the number of its closest competitor, Walgreens–and it hopes to open more than 500 new ones by the end of 2017. One sign of the growing battle: while Walgreens pushes the ad slogan “At the corner of happy and healthy,” CVS changed the name of the entire company to CVS Health. Merlo talks about the drugstore as if it’s the new doctor’s office. “If you look at the environment today, the demand for primary care is outstripping the supply of primary-care physicians,” he says. But, he adds, there’s not actually a shortage of care: “It’s the role that retail MinuteClinics are playing.”

For traditional family physicians, the idea that retail clinics should do much more than dispense flu shots is equal parts unnerving and exciting. As federal reimbursements work to shift doctors’ incentives away from ordering up zillions of tests and toward keeping patients healthy, physicians may come to rely on retail clinics for support. But the partnership between doctors and retail clinics is in its infancy, leaving gaps that raise important questions about the quality of care.

Proponents say retail clinics can be a valuable link in a chain that also includes the primary-care physician. A partnership between Cleveland Clinic and CVS, launched in 2009, suggests how this can work. Dr. Michael Rabovsky, chairman of family medicine at Cleveland Clinic, says the program grew out of doctors’ recognition that the patients in their practice liked to be able to walk into a retail clinic after hours and get treatment without an appointment. Thanks to the partnership, Rabovsky and other doctors on his team get an email that lets them know when their patient has been treated at a MinuteClinic, allowing the doctor to follow up. Cleveland Clinic doctors also oversee the MinuteClinics in the area, offering answers over the phone if a nurse practitioner has a question and reading over charts to look for ways care could improve. The relationship works well enough that Rabovsky says CVS may someday help doctors at Cleveland Clinic manage their patients’ chronic diseases. “If you asked me to predict,” he says, “I’d say there is going to be a future for it.”

Others see a trickier balance. Medical-record coordination in many places simply isn’t that advanced, says Dr. Robert Wergin, a practicing physician in Milford, Neb., and president of the American Academy of Family Physicians. That means many physicians don’t necessarily find out when their patients have received care at a retail clinic, and that can be dangerous if the patient underestimates the severity of a complaint. Says Wergin: “What you find in the practice of medicine is that every sore throat is not just a sore throat.”

CVS acknowledges that issue–and says it is prepared. It’s not unusual for MinuteClinic to send drop-in patients out of the store to a place that can offer a higher level of care like an urgent-care center or emergency room. “People don’t realize how sick they are,” says Pires, the nurse practitioner in Woonsocket. “MinuteClinic is probably not somewhere where you should be experiencing chest pain.”

Things are more complicated for patients who don’t have a primary-care physician (which describes half the patients who visit MinuteClinic, according to CVS). Without the high-tech record sharing that happens with CVS’s 51 health-system partners like Cleveland Clinic, nurse practitioners at a MinuteClinic may not have access to a patient’s history or the ability to update a primary-care physician if the patient does eventually get one. And though MinuteClinic nurse practitioners proactively offer to help patients find a primary-care doctor, it is ultimately up to the patient. For that reason, Wergin is disconcerted by the idea that MinuteClinic might offer services for the chronically ill. “If you are getting your blood sugar checked, you should see a doctor who knows the disease,” he says.

The Pharmacist CEO

Exam rooms and treatment plans are a long way from where CVS started. Its history traces back to 1963, when it was a health-and-beauty store in the working-class town of Lowell, Mass. Eager to take advantage of the easing of price controls for drug products by selling their merchandise at a discount, the founders–brothers Stanley and Sidney Goldstein and their partner, a salesman at Procter & Gamble–called the business Consumer Value Stores. CVS began selling pharmaceuticals in 1967 and in 1990 acquired Peoples Drug–where a young pharmacist in Washington, D.C., named Larry Merlo had become a regional vice president. After Peoples became part of CVS, he ascended the ranks until he became CEO in 2011. Merlo’s colleagues say the CEO–noticeably down to earth in person–still clears the shopping carts out of CVS parking lots out of instinct from his days as a store manager and pharmacist.

Merlo’s background as a pharmacist seems to be at the heart of a goal that’s less splashy than the MinuteClinic expansion but may play a more crucial role in the health of the average American: getting people to take their medicine. Specifically, getting them to take it on time and as instructed. Failure to take medication correctly costs the U.S. health care system up to $300 billion and results in 125,000 deaths every year, according to the Centers for Disease Control and Prevention. Estimates show that about a third of patients fail to fill their new prescriptions, for all kinds of reasons–because they are too expensive, have unpleasant side effects or seem to have no impact on their symptoms.

CVS thinks it can help with cutting-edge ideas like using data to identify high-risk patients and filling their prescriptions in prepackaged morning, noon and night doses, or alerting their physicians that they haven’t purchased a medication. As a prescription-benefit manager, CVS can also design employee prescription plans so that patients aren’t charged any co-pay for vital prescriptions that treat chronic problems like high cholesterol. Since roughly half of the U.S. population suffers from a chronic illness that requires numerous prescriptions, this kind of medication management keeps growing in importance.

What’s Really in Store?

CVS envisions savings for the U.S. health care system–and, of course, profits for its shareholders. Health care leaders say there’s logic there: in the Obamacare era, physicians may come to rely on retail clinics to outsource the little things so they can take better care of more patients.

What remains to be seen is whether there are risks that come with the potential. How will CVS’s business selling prescriptions affect the policies and decisions in its clinics? That inherent conflict of interest has long concerned medical professionals, though how it affects patients isn’t clear. Consumer advocates worry that CVS is already too powerful, thanks to its role as a pharmacy-benefit manager. The company recently made an exclusive deal to cover Gilead Sciences’ controversial drugs for hepatitis C, making them the only option for patients whose prescriptions CVS manages unless they get prior authorization from their doctor.

That arrangement reflects CVS’s ability to pit pharmaceutical companies against one another to get the lowest price. CVS says that this saves patients money and that doctors and patients can seek exceptions. “There is a process to work through the physician and the benefit-plan design to ensure that the patient is on the right therapy at the end of the day,” says Merlo. Overall, CVS says, MinuteClinic patients walk away with prescription costs on a par with or lower than those of other providers like emergency rooms.

Merlo is wasting no time in thinking up new ways to play a bigger role in customers’ health. Any day now, CVS will launch a technology-development office in Boston with 100 employees hired to devise everything from new ways for consumers to manage medications on their phones to telemedicine programs that will let MinuteClinic patients see nurse practitioners through a computer screen. And now that tobacco has been purged from the shelves, customers will soon notice a healthy food makeover too. Merlo calls CVS’s journey from beauty store to health care provider an “evolution, not a revolution.” For CVS’s 100 million customers, the impact will be huge either way.

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