Drugstores Weigh Into The Healthcare Market
As Obamacare enters its fifth year in force, drugstore companies continue to roll out their long-promised strategy of weighing into the health care provider ring. Most notably, CVS has laid the pipe for transition from a traditional strip mall drug store to a fully-fledged health care provider. You may recall that it began opening its Minute-Clinic in-store health clinics in many locations a few years ago. Then, in 2014 came CVS’ announcement that it would stop selling cigarettes as a part of its strategic transition to becoming a health care provider in addition to maintaining its status as a traditional drug store.
All of this comes on the heels of years of tough competition in the traditional drugstore retail market and also amid changes in the overall health care market ushered in by Obamacare. There is no doubt that classical drugstores see strategic opportunity in the adjacency of health care. But, entry into the market can be tricky—especially while keeping Wall Street analysts happy with the overall financial performance of their public companies. Walgreens’ recently rolled out its vision for creating a patient-centered pharmacy that combines mobile health care, digital health technologies and its Balance Rewards prepaid and loyalty system. Walgreens is the largest drugstore chain in the US with more than 8,200 stores, and, as the 800-pound gorilla in the room, Walgreens has the scale nationally to implement ambitious and game-changing initiatives. Walgreens President Alex Gourlay said in a presentation last month at the HIMSS15 conference, “We have 8 million customers who come across our brand every single day—6 million in drugstores and 2 million in digital assets,” he said. Emphasizing that Walgreens is “a pharmacy first,” Gourlay preached about the benefits of its digital transformation including refilling prescriptions.
Not to be outdone by its larger rival, CVS Health, operator of Minute Clinics and the country’s second-biggest drugstore chain, is planning to open a technology development center, employing about 100 people, in Boston. Chief Digital Officer Brian Tilzer says, “The lab’s focus will be on “building customer-centric experiences in health care.” Tilzer says “CVS has tripled our investment in digital and multichannel e-commerce.”
CVS has launched a strategy of “digital enablement of health care” by creating apps for its various business units; testing videoconferencing with docs in some of its Minute Clinics; and communicating about prescriptions via text messages. “The goal, Tilzer says, “is a seamless experience” whether you’re interacting with the company on the web, via a mobile phone, or in one of its 7,800 stores.
So, where will all of this investment and initiative lead? Will other retail giants such as Wal-Mart, Target, and Costco jump into the mix? Will Obamacare change the competitive landscape again? Or, will digital giants, such as Apple, Google, and Intel jump in with devices and software of their own?
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