This is the CVS of the future

In November, CVS completed its $ 69 billion purchase of Aetna, the largest healthcare in history. Now, CVS is attempting three "HealthHub" stores in Houston with a range of health services that can be foreigners' drug trafficking.

The new HealthHubs fit into CVS ( CVS ) CEO Larry Merlo's ambitious plan to make the company's 9,800 stores a "healthcare". CVS wants to embed its scattered network of stores with a range of healthcare services to protect against competition from Amazon ( AMZN ) and a wave of industry mergers.

CVS already has 1[ads1],100 accommodation mini clinics that offer basic care for strep throat or ear infection. [19659007] But the HealthHub stores are much better equipped to handle patients with chronic disorders, such as diabetes and respiratory diseases. The newly refurbished stores, with on-site dieticians, nurses, laboratory services and medical supplies on the shelves, signal that CVS wants to move its stores beyond the corridors of food and toothpaste.

"Do you need a half row for greeting cards? Probably not. And how many different types of shampoo do you need?" said Lisa Gill, healthcare professional at JP Morgan.

Houston stores replace weaker performing sections as a 20% more flooring greeting card dedicated to health products, such as for asthma and sleep apnea and iPads that explore health and well being.

"This is a natural development since they recently bought Aetna," said Ross Muken, analyst at Evercore ISI. CVS wants to present a "holistic approach to health care", he added.

Emerging health care costs

It is the largest pharmacy chain in the country, and nearly 70% of the US population lives within three miles of a CVS store.

The company's 30,000 plus healthcare professionals also make the HealthHub strategy credible with consumers: "In health care, one of the most trusted counselors is the pharmacy," Gill said.

CVS acquired Aetna to create a gigantic customer base: It gathers health premiums from around 39 million Americans. The company believes that the acquisition will help reduce costs and increase profits from these plans.

But these stores face competition from acute clinics that appear all over the country, as well as dealers like Walmart who also play a game in health care.

CVS has zeroed in on patients with chronic disorders as an important way to reduce costs. Patients with chronic medical conditions are the most expensive to insure in the United States. Five relationships account for about 80% of $ 3.5 trillion in annual health commission: Heart disease, diabetes, hypertension, asthma and mental health.

"This is where we see a great opportunity. People with diabetes, asthma, cardiovascular disease – we know their name," Merlo said last year. "They don't get their best health."

Hub stores like the new ones in Houston will target these patients with extended MinuteClinic services that can shield, diagnose, treat, and provide follow-up care. Shops in Houston will also have more patient care, as well as classes for health and nutrition seminars. For example, it is a class with the American Heart Association in Houston.

Although the Houston stores do not want doctors on the site, CVS has collaborated with TelaDoc, a virtual health platform that connects doctors and patients.

Avoid an ER tour

CVS Patients will come to their stores for lesser circumstances than going to the emergency room, which is the costly treatment option for insurance companies such as Aetna. Trips to the ER can run up vendors thousands of dollars each visit.

"Think of the number of visits ending up in an emergency room," Merlo said. "They could be seen at a retail clinic at a fraction of the cost."

CVS believes that it can become a "care coordinator for patients" and give them advice on exercise, diet and weight loss. Patients with chronic disorders can go to the doctor and go with a treatment plan, but they are often left alone after that. This is where CVS wants to develop a role.

"We're not going to cure diabetes, but we can help the diabetic patient achieve their best health and avoid accidental medical events that happen every day with thousands of people across the country," Merlo said.

Hub and spoke & # 39;

The company is planning a "hub-and-spoke approach" to remodeling stores across the country.

CVS still finds out what the hub's stores look like. Region by region, CVS says that it will determine which conditions are most prevalent in societies and which health services will provide what can reduce costs.

"If there is a society in which there is high diabetes, they will have experts stationed in the stores that offer outreach, places for customers to get supplies, places to work with weight loss and control insulin levels," Evercore & # 39 ; s Muken.

Trips to clinics increase CVS & # 39; profits and make it possible to retrieve money back to create more competitive health insurance plans through Aetna.

CVS will collect a payment for customer visits, instead of writing a check for an ER visit. 90% of the time patients visit a primary health service, a prescription will be written, Gill said.

So CVS is going to fill these prescriptions. And if customers hang around while the pharmacy fills out the prescription, CVS hopes to shop in the store for an over-the-counter supplement or one of CVS's new, healthy snacks.