As retailers looked to move further into healthcare provision, their consumer experience stood as something of a threat to legacy healthcare providers. Lately, that competitive edge seems a little less sharp.
Woonsocket, R.I.-based CVS Health has built a healthcare strategy around the ideas of ubiquity and access. The availability of healthcare assets where existing customers turn is key. But as recent reporting from The Boston Globe can show, availability or access does not always generate high assurance.
As the largest pharmacy chain in the U.S. by number of locations, CVS has been affected by staffing challenges. In addition to longer lines and slower customer service, this has carried over to the perception of its brick-and-mortar stores and clinics, The Globe reported Jan. 25.
"Healthcare is about impressions," DeAnn Campbell, retail practice lead for AAG Consulting in Atlanta, told the outlet. "You need an environment that feels clean and safe. If they can't even clean a bathroom, how can they present themselves as a provider of healthcare services?"
(A CVS spokesperson told The Globe that while a subset of its stores require additional investment, "any suggestion that there are widespread staffing shortages that prevent us from providing superior service to our customers and patients or keeping our stores and pharmacies clean is not correct.")
Like other companies with one foot in retail and one in pharmacy, CVS has faced its fair share of challenges recently. The company is working toward $700 million to $800 million in cost savings in 2024 after it saw its profits fall by 16% to $3.9 billion for the first nine months of 2023 despite a 7% increase to revenues of $86 billion from the year prior.
Similarly, Walgreens is setting out to cut at least $1 billion in costs, and Rite Aid filed for Chapter 11 bankruptcy protection last fall.
Beyond the financial hardship, mismatch between retailers' healthcare aims and reality is tied to pharmacist supply, employment and access. CVS, Walgreens and Rite Aid were affected this past fall by 'Pharmageddon,' the nicknamed walkout effort organized by pharmacists at U.S. drugstore chains in response to what they considered unreasonable performance demands, understaffing, patient situations escalating in violence, and limited resources. (Since pharmacists employed by the chains are not unionized, firm counts of participation or stores affected were difficult to confirm.)
But a significant obstacle retailers continue to face in healthcare delivery — and one that is often overlooked — comes down to dissonance in perception. Walgreens, for instance, has banked on a strategy in which consumers' visits for low-acuity healthcare are as convenient as an errand run. But convenience must coexist with credibility. The chain announced a $275,000 settlement with the state of Vermont this week to resolve allegations of untenable pharmacist working conditions, medication errors and "a trend of unexpected store closures without notice."
Beyond questions of safety and cleanliness, customers have shown mixed reactions to new care deliveries that could be seen as convenient or inferior, depending on who you ask. Dollar General set out to close a gap in rural healthcare delivery with mobile clinics in store parking lots, an offering that raised questions for some and elicited praise from others. As one customer said: healthcare and parking lots don't mix.
Legacy healthcare providers face no shortage of challenges, but they benefit from a relative absence of consumer dissonance, which may not have been as apparent when retailers began moving closer to healthcare about a decade ago.