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CVS Health (CVS) is spending $20 billion in the next 10 years to upgrade to a more tech-enabled consumer health experience, a move the company says will help address the friction in America’s troubled healthcare system.
The investment, Yahoo Finance has learned, will not just impact CVS and its vertically integrated businesses, including the pharmacy, health providers, and insurer Aetna. It will also allow competitors and other players in the sector to plug into the CVS system.
CVS's plan builds on an idea that has been a focus of change in the sector for years: interoperability. That's the idea that all different parts of the system talk to each other, ideally through a single patient record, regardless of company brand.
Various administrations have attempted to encourage the industry to do this over the years, and a number of startups have attempted to develop platforms to host such an environment. But all have been unsuccessful for one key reason, said Tilak Mandadi, CVS Health’s chief experience and technology officer: Companies have been unwilling to shake things up.
"The players that can truly change healthcare are the [incumbents]. The people that have the scope, size, reach, and a customer platform, and trust — that are willing to disrupt themselves," he said.
"We know exactly what the friction points are. And all those friction points are addressable by having better connectivity, real-time decision making...and timely payment," Mandadi added.
He is charged with leading this change at CVS, one of the larger players in the vertically integrated healthcare space. The company boasts a market cap of $80 billion and annual revenue of $373 billion in 2024, and is in the top five of Fortune 500 companies this year.
Mandadi, who spoke with Yahoo Finance today, likened the current healthcare system to an orchestra, with each musician playing their own tune and the audience members attempting to conduct.
“It doesn’t work. The No. 1 complaint from customers is the healthcare experience is not integrated," he said.
The CVS project has been ongoing. But with more emphasis on the topic in recent months as a confluence of factors, such as public frustration and a federal government targeting healthcare costs, have combined to create pressure for change. That includes the public backlash in the aftermath of the shooting of an insurance executive in December and Trump's executive order on price transparency.
CVS shared its $20 billion commitment with the Trump administration, at a listening session with the Centers for Medicare and Medicaid Services (CMS) on Tuesday, as it continues to focus on interoperability and the health tech ecosystem.
