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The Healthcare Landscape Is Changing And CVS And Walgreens Are Leading The Way

Bertha Coombs, CVS Walgreens Healthcare

With Bertha Coombs, Health Care Reporter at CNBC

As a reporter at WPLG-TV in Miami and now at CNBC, Bertha Coombs has covered financial markets, business, news, and healthcare.

Bertha joined us to discuss the emergence of CVS and Walgreens as major innovators in the healthcare industry, changing the landscape for patients and medical professionals.

Big Redesign

Bertha and Steve first discussed the retail market, noting that Walgreens and CVS have redesigned their stores recently. This can be seen as a direct reaction to the dominance of Amazon and other online retailers who have captured so many sales purely because of the convenience factor. Any mundane product—from toothpaste to tennis balls—can be ordered by a few taps of the finger and delivered to your door in a day or two.

Interestingly, part of this refurbishing has involved the stores becoming more health-focused. Bertha noted that both CVS and Walgreens are presenting an entirely new insurance-based approach, in which they offer a variety of benefits, such as prescription benefits, health screening, vaccines, even dietary counseling. The aim is to be a “front door” for health.

Merchandising Approach

The discussion then moved on to merchandising, with Bertha commenting that CVS and Walgreens are now placing a certain emphasis on products that help people remain in their homes when sick, infirm, or elderly. Bertha deems this to be the “holy grail” in healthcare currently. With this in mind, both stores are stocking items such as walkers, even allowing the customer to test drive them in-store. Some facilities are offering blood tests and eye exams as well.

Yoga Rooms And Cigarettes

Another interesting initiative that came up in the discussion was the existence of yoga rooms in these stores. Some CVS stores, in particular, are actually offering yoga classes on a regular basis. Several years ago, CVS stopped selling all tobacco products, indicating that it no longer fits in with their health-conscious branding. Walgreens, on the other hand, has been de-emphasizing cigarettes and the like and seems to be heading toward the same tobacco-free zone as CVS, but so far has not made that decision.

The two well-known retailers of CVS and Walgreens are attempting to tweak their operations in order to deal with a challenging climate. There will be adjustments along the way, but the certainty is that within a few years, a large portion of how we access our healthcare will change.

Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

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Steve Pomeranz: I don’t know if you’ve noticed but Walgreens and CVS are re-designing their drug stores to focus more on health and I guess compete with online, the online world and get more people in the store. So we’re seeing a radical change in those two stores. So that’s Bertha Coombs, a reporter for CNBC. To join me today, she covers financial markets, business, news stories, and healthcare. And she’s also, I noticed in her bio, that in the beginning of her career, she was a reporter for WPLG-TV in Miami so Bertha, welcome to the show first.

Bertha Coombs: Thanks so much.

Steve Pomeranz: And what a surprise! I have been down here for Since the mid 60s, and I remember the anchors back then were I think we talked before Anne Bishop and Dwight Lauderdale.

Bertha Coombs: Yeah they were terrific, Anne Bishop May she rest in peace, was just a real inspiration and fantastic writer and it was really one of the great experiences or the one time that I have lived outside of the Northeast

Bertha Coombs: So it was a great experience especially since family came from Cuba in ’66.

Steve Pomeranz: Oh okay.

Bertha Coombs: So it was really fun to be in Florida.

Steve Pomeranz: Alright, from now on we’re going to consider you a local girl. Okay, if that’s okay.

Bertha Coombs: [LAUGH]

Steve Pomeranz: We’re going to take a little ownership. Okay so let’s talk about what’s going on here, Walgreens and CVS as we mentioned are redesigning their Stores. What is actually happening? Let’s talk about CVS first. What are they doing, because they’re not just going to be expanding their medical centers, they’re doing some weird stuff. Tell me about it Well I mean you could call it weird, but in many ways it’s kind of moved where patients are, and you know there’s this whole move in health care to sort of be more responsive to us as consumers and who better to do that than A healthcare firm that is involved in retail. So they know consumers and one of the things they’ve seen is that there’s a lot of stuff that we now just buy on Amazon. I, for one, used to go to my corner drugstore to pick up things like bathroom tissue

Bertha Coombs: Yeah. And other recurring things. And I often just get them delivered. So what is known in the of the part of the store, a lot of those convenience things, they’re kinda deemphasizing those, because people aren’t going in as much, not withstanding the mile long coupons that CVS [LAUGH]

You. Or [LAUGH] the card discounts that rival Walgreens gives you.

Steve Pomeranz: Uh-huh. Uh-huh.

Bertha Coombs: So they’re kinda de-emphasizing that kind of stuff and trying to be more healthcare focused. So I went to the CVS new health hub. This is their new concept store, where they’re trying to. Figure out how to leverage their new acquisition of the health insure and not. The whole proposition of that is to be able to say if we take your pharmacy benefits and we take your insurance benefits and we can look at them and help you if you have a chronic disease, like diabetes or heart disease or hypertension and there are people who might have all three.

Bertha Coombs: Yeah. And we can help you manage that since we’re in your neighborhood. That is gonna help you lower your cost. It’s gonna help us as the insurer lower the cost that we pay for you, hopefully keep you healthier. Okay, well, it sounds pretty promising on paper. Now, both Walgreens and CVS have spent an awful lot of money in the last 10, 15 years, almost building a store right across from each other on almost every single corner, which I always Didn’t quite get because did we really need opposing drug stores on the east side of the street and west side of the street. But now I kind of see it makes sense because I’m still kind of lazy, you know? I don’t want to go and make a U-turn to go on the other side of the street. I’d much rather stay in the direction that I’m going. So They’ve got this big investment in the bricks and mortar, and along comes Amazon threatening to kind of get into the prescription world, but as you said, attacking the front of the stores.

So now they’re using those locations to make up these little, mini health centers. Exactly. So they’ll offer you things, everyone wants to make things more convenient for you. So both of them, I’ve experimented in different stores with optometry. You know, one fo those CVS’ just down the street from me in Time Square has a whole optometry section. One of them has, they had for awhile, they had where you could get hearing aids fitted. They’re gonna actually Phase that out because they find that people are going through different types of things to help their hearing, more over the counter things are coming down the line. So they’re experimenting to see how they keep you coming in and using Basically, that corner drug store as your place where you check in for health. They have a clinic. You can come in and get your vaccines, or come in and get your kids vaccinated for school. Or it In the case of these new concept stores for CVS with Health Hubs, they have a dietician now that’s there. They also have a respiratory therapist. A lot of people suffer from COPD. A lot of people have sleep apnea and don’t even know about it. So they’re trying to sort of Push that kind of aspect again, to be your place, you know, the way Starbucks talks about being that third place that you go outside of your home and work.

Steve Pomeranz: Mm hm.

Bertha Coombs: They wanna be that health sort of front door. Both of them are striving to make that the place that you go to get your advice because if you do. Go to the pharmacy. Oftentimes, the pharmacist can give you good advice about what medications don’t work together. They see what you’re being prescribed by your doctor. And they’re often the ones who raise the red flag to say, hey, you should talk to your doctor about not having these two medications together.

Steve Pomeranz: Yeah, so kind of like a central communication point another I guess advantage for them. Being able to see kind of exactly what your doctor’s working on.

Maybe it’s a function of the area in which I live, but there is more emphasis on seniors. More focus on seniors.

Bertha Coombs: Exactly.

Steve Pomeranz: You’re noticing that the shelves look differently now. What are they doing with regards to merchandising?

Bertha Coombs: There’s more focus on things that help people stay in their home. That is the holy grail right now in healthcare. Whether you are a hospital, whether you are a retailer, whether you are an insurer. They want to help seniors live the way they want. So CVS at these new health hubs. They actually have walkers that you can take a look at and sort of test drive a little bit in the aisles.

Steve Pomeranz: Mm-hm.

Bertha Coombs: But most CVSs you’re gonna see. They’re gonna have a kind of walker that you can buy. They’ll have grab bars to help make your shower safer so that you don’t fall. Teams for people who might have stability issues as well. So they’re really trying to cater to seniors. And a lot of seniors need that kind of help. And at CVS, they want to sort of try to help seniors also just navigate the process. I’m a caregiver for my mom, and I’m a reporter on healthcare and I have to tell you sometimes it can get very complicated trying to navigate what’s going on with her Medicare. A doctor might prescribe something and I’ll say, well, but actually her plan doesn’t cover that as well. Can you give me an alternative? And not everybody knows to do that.

Steve Pomeranz: So I noticed in your article that some of these facilities are offering blood tests as well, so right now unless you get your blood taken in the doctor’s office you have to go to a third party like a quest facility to get your blood taken. But now I guess in some of these, they’re testing out this idea You having are you going there to have your blood taken, right?

Bertha Coombs: Yeah for example Walgreens was actually trying to roll that out with lab work. So that rather than going to a separate lab corp facility you would be able to go to your Walgreens which was probably gonna be a lot more convenient.

Steve Pomeranz: Yeah.

Bertha Coombs: If you’re in Florida in the suburbs somewhere You don’t have to drive to an extra place, so you could get that done. Especially if you need something, a basic screening, whether it’s for a job, or for example, an My job they do a basic screening where you get a bonus if every year you do a health screening if you make sure you’re not hyper tensive, or have high cholesterol to get yourself Aware of what some of your potential disease issues might be.

Wellness screening they call them.

Steve Pomeranz: Yeah my guess is Bertha Coombs she’s a reporter for CNBC. We’re talking about healthcare. We’re talking about the changing healthcare landscape that’s being pushed now by CVS and by Walgreens. I noticed in your article also they Have a room for yoga. Are we kidding, or what?

Bertha Coombs: Yeah, I was pretty surprised when I saw that. They were doing it twice a week. One day was chair yoga for seniors. But they actually do a matt Yoga class as well and I don’t know about you, but if you’ve been to a yoga class in New York City, people are right on top of each other, so didn’t surprise me, it’s not necessarily the biggest room. But again, it’s the idea of getting you into the store to get you to have a conversation To get you to move and think about what is gonna help you be healthier. Walgreens is not quite there yet, in terms of the things that they are trying in different stores. But they have a number of partnerships where they are working and doing smaller pilot programs with Humana in one market. They are also trying to work with Microsoft, To leverage data so that they, too, can sort of say, hey, look, you’re at risk of developing diabetes. Here’s some steps that you can take before it actually becomes a health issue for you.

Steve Pomeranz: Speaking about that in particular, the news this week has been this charge that Walgreen’s has been selling tobacco to minors and I know that CVS got out of that what? About four, five years ago and.

Bertha Coombs: Yeah.

Steve Pomeranz: Basically said, we’re a healthcare company and we don’t wanna sell tobacco. So what’s the latest on that?

Bertha Coombs: It was a big hit for CVS when they did it five years ago.

Steve Pomeranz: Earnings, an earnings hit.

Bertha Coombs: On their earnings, yeah, and their profits. But they got over it and moved on. And now it’s a point of pride for them and advertising, I can say.

Steve Pomeranz: Sure.

Bertha Coombs: We’re about health, so we don’t sell cigarettes. For Walgreens, it’s been more of a process. Interestingly, just in the The end of January they had a shareholder meeting and some of their activist shareholders in the corporate responsiblity world had been pushing them to get out of cigarettes because how can you be at the corner Of healthy and happy if you’re pushing.

And the news this week from the FDA commissioner, that they took a look and they found that Walgreens was one of the places where Cigarettes and other tobacco products were being sold to minors. One of the biggest chains to have that problem underscored what some of these investors were saying. Walgreens, for its part, have been Doing a pilot program in the Gainesville market, in fact, with about one and a half dozen stores where they have gotten rid of cigarettes, and they did say in their most recent earnings that they have been trying to deemphasize cigarettes, but. Hold a meeting back in January. The corporate line was basically that it’s a management decision. They’re trying to figure out what the right mix is.

Steve Pomeranz: Yeah.

Bertha Coombs: And smoking is a choice.

Steve Pomeranz: So it’s, in a sense.

Bertha Coombs: But they are kind of slowly trying to get out of that business.

Steve Pomeranz: So you know what? I think there’s a patch for that. So you know. [LAUGH]

Bertha Coombs: Well, they are trying

Steve Pomeranz: You know, Walgreens has to go cold-turkey. And you know what I’m saying?

Bertha Coombs: Yeah. They are actually trying to

Steve Pomeranz: [LAUGH]

Bertha Coombs: Trying to push those. The smoking cessations and things like that. But again, at a time when retailers, physical retailers are really struggling with margins. And their profits.

Steve Pomeranz: I know, that’s the problem.

Bertha Coombs: And then try to figure out what the right mix is. One analyst told me they’re sort of letting it bleed away rather than create a big shock to take that hit at the moment because as we all know. [CROSSTALK]

Steve Pomeranz: Kudos to CVS for doing that. My guest Bertha Coomes, reporter for CNBC And as you drive up and down the street and you see your local and CVS you have a little further insight the battle field is going on inside store. Bertha, thank you so much for joining me. Thanks so much for having me, it was a pleasure.

Bertha Coombs: To hear this in any interview again, and to write us a question, we do love your questions, and talk about what we’ve just discussed, visit our website, which is stevepomeranz.com to join the conversation. And while you’re there, sign up for our weekly update and learn about all of our upcoming live events Send important topics that we’ve covered this week straight into your inbox every single week. That’s Stevepomeranz.com. That