When I initially broached this idea with the CVS team, someone asked me if I wanted to expand the CVS MinuteClinic. I said, “No, we don’t need three more plastic molded chairs and a countertop. We need something much more radical. We need to create a venue that people actually want to visit.”
Ron Williams used to say, “No one goes into a store and buys an Aetna.” Instead, an Aetna product is sold to people because it’s something they need. Similarly, most people go into a CVS to buy something they need. The store serves a function, but it could aspire to something greater. Other retailers take that approach.
George Blankenship designed the stores for the Gap, Apple, Microsoft and Tesla, all of which create a positive, even exciting experience. Blankenship once told The New York Times that at Tesla showrooms, the goal was “to never sell a car from there.” He wanted people to ask to buy a car. It’s a similar concept with Apple. You enter the store and you’re so engaged in what you’re seeing, so mesmerized, you want to buy something from Apple. Apple doesn’t need to sell you anything.
A CVS store will never sell an electric car or a smartphone, but it can still be a place people want to visit and say, “Wow, this is cool.” As we envisioned this future CVS store, it will continue to sell health and beauty products and have a robust pharmacy, but most consumer items will be cleared out, and the space will be devoted to improving the health of the community.
When you walk in, a greeter will ask, “How can we help you today?”
If you say, “I want to start running again, but I need a brace for my knee,” the greeter will say, “Great, let me take you over here to get you fitted for one.” We’ll have a durable medical equipment area, and we’ll have a professional who can fit you with a knee brace. We’ll have a partnership with a retailer like REI, and we’ll have stairs that you can practice on before leaving.
CVS MinuteClinics already provide a wide range of health services, but the new stores will expand those and also offer procedures or exams that have long been done in hospitals. For example, when a woman receives a mammogram, her doctor sometimes orders a CT scan. But the patient may have to wait two weeks, as the CT scan operators are only available from eight to five. The CVS stores could have a 24-hour CT scan available.
Women could receive the scan sooner, and because it’s close and accessible, women would be more likely to get it in the first place. The same is true for other kinds of X-rays, with infusions or even dialysis. Aetna has oceans of data about our members, and we’re developing models that tell us where the greatest opportunities are for investing in their health, be it through digital communication, personal visits or other outreach efforts. As we continue to expand these efforts, the CVS locations will become an accessible front door for the system at large.
The conversations between Larry’s team and mine continued into the fall of 2017. Our focus remained on the strategy, and we agreed that the best way to achieve our goals—a shift to lower-cost sites of healthcare services, improved quality of care and improved care management—was for CVS to acquire Aetna.
We next talked about whether the cultures of the two companies would support those efforts, and finally we talked about price. On October 11, I received a formal offer from Larry for CVS to buy all the shares of Aetna.
News of our negotiations leaked to the press, but we continued on, with a small army of investment bankers and lawyers trying to iron out the many details. Merger agreements are always a bear, and we were nearly complete when my team came to me and said that CVS wanted the ability, starting in May 2019, to change our benefits package for our employees. That included everything from healthcare to tuition reimbursement to yoga.
They asked me what I thought. I told them I didn’t care about the benefits for the executives—they would be fine—but I would not sign any agreement that changed the benefits for our frontline employees. That was a commitment that we had made, and we would not renege on that promise. I was willing to walk away from a $69 billion deal on that principle. CVS retained the benefits.
On December 3, the announcement was issued that CVS would be acquiring Aetna for $207 a share in a deal that could “reshape the health industry,” according to the Times.
That’s certainly the goal.
Convulsive change has always been part of capitalism, but technology and globalization have accelerated the shocks. Artificial intelligence alone could have the same effect, in both economic and social change, that electricity or computers once had. All manner of companies across all kinds of business, from manufacturing to finance, from publishing to retail, adhere to business models that may soon be obsolete, if they aren’t already.
Who wins and who loses? It starts with the courage to challenge the status quo, even if that displeases existing stakeholders or puts the business itself at short-term risk. The role of the CEO is to paint a clear picture of what the future holds, and that includes an honest assessment of the company’s capabilities, a catalog of the changes necessary to be relevant tomorrow and a willingness to make the difficult decisions to proceed.
That was our mindset at Aetna. During our negotiations with CVS, my board asked me why we should sell a company that was performing so well and was delivering to its customers and its shareholders.