How CVS Is Reinventing Retail From The Pharmacy Floor

There are many complementary adjectives people routinely apply to their pharmacist. “Friendly,” “organized,” “knowledgeable” and “helpful” were all words customers of a Boston-area CVS used to describe how they felt about their pharmacist. While some people didn’t have much an opinion on their pharmacist one way or the other, no one had anything bad to say.  

But no one described their pharmacist as innovative either. And it is unlikely anyone ever has — because while almost anything and everything else in the modern world is described as innovative, it is just not on the whole how consumers tend to think about their pharmacy. Which is not to say that pharmacies haven’t seen various technological upgrades over the last two decades — self service kiosks, texted reminders, etc. — or that these are things consumers didn’t like, because they did and still do. They just don’t tend to think to themselves “wow, that’s cutting edge.”

But CVS is angling to change that. They want to be the world’s most technologically innovative pharmacy.  

Now, granted, in the age of innovation, most marketing departments have learned to highlight a burning passion to be the most innovative company in the X industry – even when the industry is one you wouldn’t think of as being particularly innovation focused – like say salmon farming.

But CVS is investing in innovation as well as talking about it – in the form of a recently opened Digital Innovation Lab in Boston’s Back Bay.

“We’re going to invent things here that don’t exist anywhere on the planet, things that can be focused on what truly matters: our health,” promised Brian Tilzer, CVS Health’s chief digital officer. “We’re using digital to change health outcomes of millions of Americans.” 

The new vision is part of the building of the new CVS brand, which is less about pharmacy in general and more about being a health services company. Hence the addition of the word “Health” to the company name about a year ago — and the decision to stop selling cigarettes in their retail locations. It also moved the Rhode Island-based firm to purchase prescription services provider Omnicare last May for a whopping $12.7 billion and to shell out another $1.9 billion in July for Target’s pharmacies and clinics.

“When we introduced the new name for our company, CVS Health, we began a new era of growth with a broader health care focus and an appreciation of the rise of health care consumerism with consumer choice and accountability growing,” CVS Health President and CEO Larry Merlo noted at the time. “This relationship with Target will provide consumers with expanded options and access to our unique health care services that lead to better health outcomes and lower overall health care costs.”

That broader focus has also led CVS to build what Tilzer says is the largest retail installation of beacon technology, used to send in-store messages to phones.

“We’re trying to weave digital into everything about CVS Health,” he noted.

Tilzer further explained that 85 percent of CVS customers are carrying smartphones, making a very mobile-first solution set key. That can mean the straightforward communications functions on the phone – but with things like healthkit and the various biometric sensors that are coming built into phones and wearables (nb: Tilzer wears a Apple Watch). The Lab exists to figure out just how to tap into those tools to better customer health.

Shortly after the lab opened, it released the prototype for an otoscope that can be plugged into a phone. Kid wakes up in the middle of the night with an ear infection? No problem — stick the scope in, snap a photo and send it off to CVS for diagnosis.  

The opening innovations are less flashy than the plug and play otoscope — but useful and interesting ideas nonetheless, especially for a company not known for tech prowess. Other offerings include glucose monitors, blood pressure gauges, the ability to scan one’s driver’s license instead of filling out forms and an app named Ellen – who is a personal assistant like Siri, if Siri were programmed to shame and harass you about remembering to take your pills.

“We’ve named this after my mother, Ellen, who is the ultimate nag,” Tilzer explained.

The Lab, Tilzer says, is a good beginning for CVS’s digital efforts, but not a final destination. The goal now, he says, is to make the best of use of the space to develop connections and partnerships to the rich tech and health care resources in Boston.  

And that goal got a boost yesterday with the announcement CVS has teamed up with startup accelerator MassChallenge in Boston and digital health venture fund Rock Health in San Francisco.

“We know that some of the best digital health innovations are already being developed, so we’ve made partnering a key part of our digital efforts,” Tilzer said of the parnership. “We have broad scale and resources; MassChallenge offers a competitive startup accelerator program and Rock Health has an impressive portfolio of market-leading companies. By working collaboratively with each, we can rapidly design and test new ideas – ultimately bringing solutions to our customers that will dramatically impact the way they manage their health.”

The MassChallenge partnership is particularly important to CVS, as a main push to open the Digital Innovation Lab in Boston (and away from CVS corporate headquaters in RI) was to develop deeper ties to the city’s tech community. And an effort that seems to be paying off.  

“We’ve seen steady growth in the number of digital health startups that are seeking entrepreneurial resources,” MassChallenge Boston’s managing director Scott Bailey said in a statement. “We hope that by working with CVS Health, these startups will gain access to an even greater network of resources, helping them to develop their products, make new discoveries and rapidly grow their businesses.”

The path to being a health care innovator will not be an easy one — even for a $141 billion firm like CVS. Their vision is big, but to build those ideas they’re going to need to attract a lot of top talent — and top tech talent is not exactly easy to come by. After all, there are probably very few developers sitting out there today wondering “What do I have to do to get my foot in the door at CVS?”

But CVS has stolen some talent — notably Andrew Macey, CVS Health’s vice president of digital strategy who came to the firm via Luxottica, the Italian eyeglass maker where he was the head of digital.  

“Luxottica was great, but look at the difference in impact you can have between eyeglasses and health care,” Macey recently told Fast Company.

CVS is now betting that the desire to make a difference will ultimately be what makes a difference to some very talented innovators looking for ways to apply the talent. It’s a tall order, but a firm looking to stand at the nexus of health care and technological innovation could find much worse cities than Boston to build their lab in.  


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