CVS Business Model (What Is It, Strategies + More)

Sprouting from a single operating store selling beauty and health products in Lowe, MA, CVS Health rapidly expanded its operation to become a giant health and wellness retailer.

With the rapid progress in the industry, other growing entities in the health sector might ask, what’s CVS’s business model? I wondered the same thing and researched CVS in-depth. Here’s what I found out!

What Is The CVS Business Model In 2022?

CVS’s business model is based on retail pharmacy and healthcare service operations through physical stores and online channels as of 2022. The company offers advice on prescriptions, helping manage specialty and chronic conditions, walk-in medical care, and pharmacy benefits management. As such, the company’s operations help shape the future of healthcare within communities.

If you want to learn more about CVS’s business model, how it works, the strategies employed, and much more, keep reading!

How Does The CVS Business Model Work?

CVS’s business model works toward the company’s goals of taking care of the country’s healthcare needs by meeting the wants and needs of individual consumers.

As a healthcare service provider, CVS delivers healthcare to consumers by setting up physical locations, pharmacy stores and creating online platforms where consumers can seek and access quality health care.

Further, the company strives to deliver convenient access to healthcare products and quality services at affordable prices.

To achieve this, CVS organizes its operations into three business segments as follows:

Pharmacy Services

CVS pharmacy services provide a wide range of pharmacy benefit management solutions, including the operations of:

  • Specialty mail-order pharmacies
  • Specialty pharmacy stores
  • Mail-order dispensing pharmacies
  • Branches of infusion and enteral services

Retail/Long-Term Care

Through a chain of retail pharmacies and online channels, CVS also sells over-the-counter medication and prescription drugs.

Additionally, the retail pharmacy stores and online channels sell beauty and cosmetic products, personal care products, and general pharmaceutical merchandise.

Moreover, CVS offers long-term care through the company’s Omnicare unit.

Corporate

CVS’s corporate business segment offers management and administrative services to support the overall operations within the entity.

That said, the corporate entity is responsible for pharmacy benefits management services involved in negotiating contracts between manufacturers, payors, and pharmacies.

What Are The Strategies Of CVS’s Business Model?

CVS employs strategies such as identifying its customer segments, providing a value proposition, utilizing the omnichannel approach, and creating customer relationships to drive its business model.

Further, here’s how CVS utilizes the strategies:

Different Customer Segments

CVS serves a wide range of consumers related to the pharmaceutical and healthcare sectors to adequately provide healthcare services to the masses.

With that, the company’s pharmacy service segments offer a wide range of services, including formulary management services and prescription management to the following customer segments:

  • Institutional and Government Clients: This segment includes different trade unions, health and managed Medicaid plans, government employee groups, and plans offered on the public exchanges.
  • Commercial Clients: This segment includes employers across insurance companies and multiple business sectors exposed to the health sector. Also, CVS serves individuals and other sponsors of health benefits through a chain of retail pharmacies.

Currently, CVS serves customers in the US and has no major operations outside the United States.

The Value Proposition Of CVS

The Value Proposition Of CVS

CVS’s business model and operations provide values to the consumers in the following ways:

Provides An Extensive Range Of Services

CVS provides its customers with a wide range of pharmaceutical and clinical services to individual, commercial and institutional clients.

These services include formulary management, medical plan design offering and administration, prescription management solutions, Medicare services, specialty pharmacy, and infusion services.

Easy Accessibility And Domestic Reach

For easier accessibility by its customers, CVS has extensive operations in the US, including retail pharmacy, specialty pharmacy outlets, mail pharmacies.

Furthermore, CVS offers its clients accessibility through online platforms and digital channels such as MinuteClinic and Caremark units.

CVS’s Industry And Specialist Experience

CVS manages to realize the goals of its business model by employing specialist personnel across all departments within the three operating segments; trained nurses, pharmacists, dieticians, and experienced industry executives.

With specialist experience, CVS has established a good reputation as a reliable and efficient pharmacy service provider.

The Omnichannel Approach

CVS utilizes the omnichannel approach to provide customers with products and services through online platforms and brick-and-mortar stores.

With that, CVS operates a chain of pharmacies spread across 49 states in the US for its brick-and-mortar operations.

Further, the chain of retail pharmacies includes 9,655 stores, including proprietary stores and pharmacies located within Target stores.

In line with its digital and online platforms, CVS’s website (www.cvs.com) provides information on its various services, solutions, and activities.

Also, CVS operates websites for MinuteClinic, Caremark, and Specialty offering, which hosts online channels for customers to manage prescriptions, pay bills, and track their online records.

Moreover, other CVS online pharmacy channels include Onofre.com.br and Navarro.com.

In addition to the online platforms, CVS offers mobile apps for iOS and Android users. Finally, it operates mail order pharmacy units that use telephone, fax, post, e-prescription channels.

Customer Relationships

CVS offers a wide range of services on a self-service basis through MinuteClinic and Caremark channels and the online sales channel Onofre.com.br and Navarro.com.

Through these channels, customers can book appointments, make orders, track deliveries, and pay bills without interacting directly with CVS employees.

Furthermore, these platforms offer additional support resources, including health advice, prescription help, and articles.

Hence, customers can contact the CVS team directly on the phone or online to get personalized responses to complaints and inquiries.

Also, the self-service operations extend to the retail pharmacy operations, where trained staff can offer advice and assistance.

Then, customers can consult directly with the staff to receive treatment plans and solutions based on individual needs.

How Does CVS Make Money?

CVS makes its money by being the most prominent pharmacy services provider in the US with chains of retail pharmacy stores, pharmacy services, and claims processing.

That said, the company pharmacy business earns CVS 47% of its revenue by providing pharmacy-related services and sales of prescription drugs.

Finally, the retail/LTC (Long Term Care) portion earns CVS about 29% of total revenues, while Care Benefits earns approximately 24% of total revenues.

To find out more about CVS, you can also see our posts on what is CVS pharmacy, CVS mission statement, and CVS competitive advantages.

Conclusion

In conclusion, the CVS business model is designed to drive the company’s activities in retail pharmacy operations and healthcare service operations.

That said, all strategies in the business model ensure that consumers can easily get access to affordable health care services.

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Marques Thomas

Marques Thomas graduated with a MBA in 2011. Since then, Marques has worked in the retail and consumer service industry as a manager, advisor, and marketer. Marques is also the head writer and founder of QuerySprout.com.

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