CVS 2013 Annual Report Download - page 22

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CVS Caremark
Our pharmacists executed close to 80 million live clinical
interventions during the year. That helped CVS/pharmacy
deliver best-in-class adherence results compared to our
top three retail competitors in areas that include diabetes
therapy, cholesterol therapy, and blood pressure therapy.
Among patients that take medication for high blood pres-
sure, our adherence rate translates into the prevention of
20,000 heart attacks, 5,000 strokes, and 3,000 deaths
each year. These outcomes are obviously meaningful to
our patients and their families. They also broadly benefit
a health care system that incurs $300 billion in avoidable
medical costs each year due to medication non-adherence.
ExtraCare® and store-brand initiatives continue to
drive profitable sales in the front of the store
Our ExtraCare loyalty program has been a key driver of
our profitable front store sales, and it is helping us deliver
a more personalized experience to each customer. The
industry’s longest-running loyalty program, ExtraCare
has 70 million active cardholders who accounted for
70 percent of front store transactions during the past
year. These cardholders get two percent back every
day and received $3.6 billion in ExtraBucks savings
and rewards in 2013.
It’s important to note that we have spent 16 years gath-
ering insights and perfecting ExtraCare, which means
that no competitor can match the depth of our customer
analytics. We’ve leveraged our ExtraCare insights to
convert customers to categories they shop elsewhere,
to launch personalized digital circulars, and to tailor our
merchandise mix to better meet customer needs.
Our store and proprietary brands represent another
key driver of profitable front store sales growth. These
products are sold under a variety of proprietary labels
such as Gold Emblem
™
and Essence of Beauty® and
accounted for 17.8 percent of front store sales in 2013.
Importantly, they also provide significantly higher margins
than national brands while saving our customers money.
We have an aggressive strategy in place to move their
penetration to well over 20 percent in the next few years.
MinuteClinic® provides unmatched offerings to our
PBM clients and aligns with leading health systems
MinuteClinic today represents a small percentage of our
revenues, but it is significant to our overall health care
strategy and is expected to play an important role in the
rapidly evolving health care system. Our 2,200 nurse
practitioners and physician assistants provide high-qual-
ity, affordable walk-in medical care services seven days
a week without appointments. With more than 800
clinics currently in 28 states and the District of Columbia,
MinuteClinic is expected to grow to 1,500 locations in
over 35 states by 2017. Through this expanding network
of locations, MinuteClinic will play an important role in
helping alleviate the growing shortage of primary care
physicians in the United States, especially as more
people obtain health insurance.
MinuteClinic now has more than 30 major health system
affiliations, adding seven in 2013 alone. We are working
with the nation’s leading health care systems to ensure
that patients receive high-quality, cost-effective care at
the appropriate site of service. MinuteClinic is becom-
ing an integral part of the services these organizations
offer as they develop accountable care organizations,
patient-centered medical homes, and other new models
of care. In addition to providing care for common acute
illnesses, injuries, and skin conditions, MinuteClinic offers
chronic disease and wellness services while integrating
medical records with primary care providers. As we look
for new ways of improving care while lowering costs,
we will offer innovative new services such as TeleHealth
™
at MinuteClinic, which is currently being piloted in
certain markets.
The new health care environment presents growth
opportunities across our enterprise
With health care reform and major demographic shifts
underway in the United States, our industry landscape
is poised to change significantly in the coming years.
There are a number of moving parts related to coverage
expansion, and the initial rollout of the ACA has come
with its challenges. That said, we continue to expect that
coverage expansion will provide a long-term tailwind for
the industry. The importance of government payors and
health plans is clearly rising, and we believe that CVS
Caremark is very well-positioned for this trend.
We have strong positions in the Medicare and Medicaid
markets across both our retail and PBM businesses.
Let’s look at Managed Medicaid, where 30 million
people are currently enrolled. This number is expected