CVS 2014 Annual Report Download - page 21

our services would be recommended to friends or
colleagues, has grown over the past two years. Among
health care organizations, our scores are unmatched.
Our own research published in the October 2014 edition
of The American Journal of Managed Care shows that
CVS/minuteclinic’s quality performance matches or
exceeds that of other ambulatory care settings for three
common health conditions.
Although CVS/minuteclinic is largely known for treating
sore throats, ear infections, and other acute conditions,
we are focused on expanding its scope of services.
That includes adding chronic disease monitoring and
treatment for conditions such as hypertension and
hyperlipidemia. We have expanded our biometric
monitoring, tobacco cessation, and weight loss pro-
grams. We undertake chronic care only when working
with primary care doctors to complement the services
they offer. Our affiliations with major health systems
throughout the United States—and two-way integration
of our electronic medical records—heighten our ability to
provide collaborative care. We added 19 health systems
in 2014, ending the year with 49 such affiliations.
Growth of government programs and
exchanges presents significant opportunities
across our enterprise
Government programs represent a tremendous growth
opportunity for us, and we have strong positions in both
the Medicare and Medicaid markets. The United States
is in the midst of what we are calling a “silver tsunami,”
with some 10,000 baby boomers turning 65 every day.
This means that more than 17 million new people will
be eligible for Medicare by 2019. CVS Health serves
this market through our SilverScript Medicare Part D
prescription drug plan, as the PBM for our health
plan Medicare clients, and through Employer Group
Waiver Plans.
As a result of the Affordable Care Act, we have seen
significant growth in Medicaid over the past year with
states expanding eligibility. This growth will likely continue
as more states evaluate their Medicaid expansion
decisions. At the same time, the growth of managed
Medicaid over traditional fee-for-service models has
been fueled by states seeking cost savings opportuni-
ties. CVS/caremark participates in managed Medicaid
through health plan clients, and our 19 percent share
makes us an industry leader. Medicaid also currently
accounts for 14 percent of prescriptions dispensed
at CVS/pharmacy locations. Our retail footprint and
capabilities give us an opportunity to gain even greater
share as managed Medicaid providers narrow their retail
pharmacy networks to save costs.
The next several years are expected to bring continued
growth in the number of people seeking insurance
through the public exchanges. Additionally, we believe
some employers will explore private exchanges as a
viable option to reduce health care spending for their
retirees. CVS/caremark participates on the public and
private exchanges on a carve-in basis with health plan
clients. On the private exchanges, we also participate on
a carve-out basis as a standalone PBM where we offer
prescription benefits directly. We expect the growth in
exchange lives to provide an incremental lift to our retail
pharmacy as utilization increases.
Clearly, we are seeing tremendous opportunities for
growth throughout the enterprise, and I believe that our
integrated model will allow us to take full advantage of
them. In closing, I want to thank our board of directors
and the 217,000 colleagues who work so diligently
across CVS Health. They have committed themselves
to our unique model of pharmacy care and have given
us a compelling advantage in today’s marketplace. To
my fellow shareholders, thank you for your continued
confidence in our strategy.
Sincerely,
Larry J. Merlo
President and Chief Executive Officer
February 10, 2015
19
2014 Annual Report
NEWLY INSURED LIVES WILL DRIVE UTILIZATION
By 2019, the total number of insured is expected
to increase by 36 million through individual
exchanges and other government programs.
2013 2019E
300
264
Growth in U.S.
insured lives
lives in millions