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CVS's New HealthHub Program Aims to Reinvent the Corner Drugstore

By Daniel B. Kline – Updated Apr 18, 2019 at 11:18AM

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Pharmacy and convenience store chain CVS Health continues to build on its 2014 decision to focus more on health.

In 2014, CVS Health (CVS 0.42%) made the decision that selling cigarettes did not match its brand positioning as a company focused on its customers' health and well being. That move cost the company about $2 billion in sales and some shoppers in the short-term, but set CVS on the path that led to its $78 billion purchase of Aetna, a deal designed to further the company's goal of "transforming the healthcare experience in America."

Basically, the company could defend selling chocolate bars and beer and wine because it's possible to use those products in moderation. Cigarettes, however, were a more clear health evil, and the company understood the hypocrisy of its message if it continued to sell them.

Now, fresh off the Aetna purchase, the chain has begun testing another move in its efforts to change healthcare for Americans. CVS this month began a pilot test for HealthHub locations, stores that offer 20% of their floor space to health services.

A man walks toward a CVS HealthHub location.

The CVS HealthHub devotes more floor space to healthcare services. Image source: CVS.

What is a HealthHub?

CVS used to be a drugstore mixed with a convenience store. It was a place to pick up prescriptions and maybe get a magazine, something to drink, and paper towels or a package of light bulbs. The only health services offered in those stores, aside from the pharmacist's ability to answer questions, was perhaps one of those machines that takes your blood pressure.

That has changed as CVS partnered with MinuteClinic in 2006 to offer walk-in medical clinics in some of its stores. These locations offer basic medical treatment -- diagnosis and treatment of minor illnesses, injuries and skin conditions; administration of vaccinations, injections, health screenings and physicals; and monitoring for chronic conditions, according to a CVS web page. 

The MinuteClinics are staffed with nurse practitioners and physician assistants who have the licenses, certifications and clinical experience necessary to provide treatment for adults and children. There are now 1,100 MinuteClinic locations inside CVS' 9,800 locations worldwide.

HealthHub, in many ways, builds of the MinuteClinic model as it's an effort to bring customers into CVS for reasons that go beyond buying things or picking up prescriptions. The three Houston-area pilot stores offer "a broader range of healthcare services, new product categories, digital tools, and on-demand health kiosks, trusted advice, and personalized care," according to a press release. The locations also offer an expanded selection of durable medical equipment (items including canes, crutches, and blood sugar monitors) as well as new product and service combinations for sleep apnea and diabetes care.

"We believe that transforming the consumer healthcare experience begins with creating a new front door to healthcare," said CVS Chief Transformation Officer Alan Lotvin in a press release. "Our new HealthHUB locations are just that -- helping to elevate the store into a convenient neighborhood healthcare destination that brings easier access to better care at a lower cost."

Each HealthHub is built around a customer service person the company has dubbed the "Care Concierge." This is a person tasked with helping customers find what they need and letting them know which of their health needs can be taken care of in the store.

So far, the experiment has been working, according to data provided by CVS. "To date, customers accepted help from our Care Concierge in more than 95% of recorded interactions, with 50% resulting in engagement with another HealthHUB provider or offering," according to the press release.

Check out he latest CVS earnings call transcript.

What is CVS trying to do?

CVS wants to make basic healthcare more accessible and more convenient. Essentially, the chain wants to make it easier, cheaper, and less daunting to seek basic medical attention or learn about areas of wellness -- like diet and exercise -- without having to go to a traditional doctor.

This is CVS trying to be a healthcare destination rather than a store. Each HealthHub even has open space where classes (everything from yoga to nutrition seminars) can be conducted.

Three pilot locations are likely only a start for HealthHub, which clearly fits how CVS management sees the future of the company. The format may get tweaked as the test continues but using more floor space for healthcare offerings  -- instead more aisles of snack chips or soda selections -- fits the company's mission statement to transform the American healthcare experience.

Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool recommends CVS Health. The Motley Fool has a disclosure policy.

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