CVS Health has big technology plans once its purchase of Aetna closes including rationalization, a data platform and analytics designed to optimize care.
At an analyst meeting designed to allay shareholder concerns, CVS Health reiterated that it will deliver 2019 revenue of $251.2 billion and $254.4 billion with adjusted earnings of $6.75 to $6.90 a share. CVS is also plotting $900 million in integration synergies with Aetna in 2021 and a $1.5 billion to $2 billion in annual run rate savings for modernizing the enterprise.
"We're seeing the evolution of personalized care with a greater recognition that one size does not necessarily fit all patients. Advances in technology and the proliferation of personalized data through the increased use of genomics and wearable technology had made analytics a very important complement to provider health care decision-making," said CVS Health CEO Larry Merlo.
And a lot of these journeys will be local. CVS plans to launch 1,500 HealthHubs, which will offer a bevy of local health services, by the end of 2021. Think of HealthHub as the next-gen Minute Clinic at CVS. HealthHubs will offer ongoing care for diabetes, preventative care and wellness, dieticians and health insurance navigation. These locations will also offer immunizations, sleep assessments, primary care and school and sports physicals. Many of these better health outcomes will start with data.
These big plans won't pay off unless CVS Health and Aetna can combine their data stacks effectively.
Now building out our technology infrastructure is essential to our goals by simplifying the consumer experience, improving health outcomes and driving efficiencies. And uniting CVS Health with Aetna provides us direct access to an unparalleled breadth of data. We're creating a new data ecosystem to protect this data as well as leverage it across our organization to provide a holistic view of the patient, garner insights into the Next Best Action to improve their health and determine how to best communicate with the patient. Our aim here is very simple, to turn data into insights and then insights into action.
Here's a look at some of the data moving parts at CVS Health.
A multi-channel health experience
Alan Lotvin, executive vice president of transformation at CVS Health, said that the company is looking to offer consumer-centric health care. This approach would meld data, personalization and local touch points such as HealthHubs.
Our North Star is to improve health. It really is to make the patient experience simpler, using technology to incorporate these services into people's lives to help them make those choices that improve their health outcomes. We know that with better health outcomes, you have lower costs. Part of making it simple is not just enhancing the digital experience but it's linking the digital and physical experience, which we are uniquely capable of doing through the community assets.
Much of that health care experience will have to move beyond telephone, mail and fax. CVS has its app and text communications with about 72 million people.
In 2019, talking about text may not seem like the most technologically advanced experience. But remember, health care is one of those few industries that still runs largely on telephone, snail mail and fax. So by being able to communicate with people in a much more modern fashion, we are changing that experience. And finally, we are in their communities. We are part of their lives. They choose to come and work with us. When we want to offer programs, bring new services to people, we're not calling them at 6:00. We're not sending them unexpected mail or e-mails. They are choosing to interact with us.
With the proper data approach, CVS Health can bolster consumer health outcomes. Lotvin added:
We think this is a true greenfield space. We think about it -- if I needed to go get a cab outside, I would call Uber. If I wanted to look up a piece of information, I'd go to Google. And if I want to watch a movie, I go to Netflix. There is no equivalent in health yet there is a tremendous need for it.
Lotvin noted that there's a lot of investment going into consumer healthcare startups, but the industry is fragmented. The differentiator for CVS Health will be the blend of its local touch points combined with data and analytics on the back-end, said Lotvin.
Jonathan Roberts, operating chief of CVS Health, put some details behind the data plan. First, there's the rationalization of blending Aetna and CVS systems. There's also a supply chain optimization effort as well as overall system upgrades.
But the data strategy is what CVS Health has to nail.
Roberts broke down the infrastructure into three components:
The products and services that we develop will be designed around the needs of the consumer. They will include interventions in our stores, support in the home and new digital tools and capabilities. All of this will be driven by a consumer centric technology infrastructure with 3 interconnected elements. The first is integrated data and advanced analytics, which will give us a much deeper understanding of consumers. The second is an intelligent engagement platform, which will deliver personalized experiences to consumers based on their wants and needs. And the third are seamless and connected digital and physical experiences to drive simplicity, convenience and better health care outcomes.
For CVS Health, the hub of this effort is its enterprise data platform. Costs will be saved through personalization, preventative care and avoiding trips to the emergency room. This data platform will also improve operations and allow CVS Health to be more nimble. Artificial intelligence and machine learning will also play a big role.
By applying a wide range of analytics to our integrated data including machine learning and artificial intelligence, we will be able to generate meaningful insights to drive growth, improve our business performance and execute against our strategy. For example, these insights can lead to increased membership growth by improving sales, marketing, product and pricing decisions. We will also be able to deliver differentiated tools to better support our provider partners and we will further reduce cost by more quickly identifying trends such as overpayments and improving medical cost trend management. At the same time, these valuable insights will give us the ability to inform individuals about their next best health actions.
The other part of the infrastructure overhaul will revolve around engaging customers. Roberts said the plan is to use the engagement platform to take insights and recommend behaviors to change. Based on responses, CVS Health in theory can map out a consumer's health journey based on demographics, behavior, health status and preferences. The company will also know via Aetna data whether a person was admitted to the hospital. In other words, CVS Health is going for contextual engagement too.
Our data platform will provide a continually updated view of including health information. Our analytics capabilities will offer additional engagement recommendations including healthy food choices and recipes. And our integrated backend system will facilitate seamless, simple and convenient front-end experiences (such as MinuteClinic).
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