Company hopes to save $3 billion before 2021 through 3-pronged savings plan.
Beginning in early 2017, CVS will close 70 of its stores as part of their savings initiative, which should provide a $265 million cost-savings benefit to CVS, according toRetail TouchPoints.
Closing these stores is the first step in a 3-pronged attack designed to save the company about $3 billion before 2021. Dave Denton, EVP and CFO of CVS, revealed the savings initiative during CVS Health’s annual Analyst Day event.
The second step is to enhance the efficacy of corporate shared services, which involves consolidating similar activities across business units,Retail TouchPointsreported. The company hopes it will reduce labor costs by 15% to 20% for relocated activities.
Finally, CVS will begin redistributing different aspects of pharmacy workload to help better maximize script fulfillment capacity, by using process redesign and technology, according toRetail TouchPoints. The last initiative is expected to save the company approximately $700 million to $750 million per year.
CVS’ integrated model of health care services, including retail pharmacy, pharmacy benefit management, and clinical care, will remain highly competitive, the company said during the Analyst Day.
“We own the last mile of service in the delivery of health care,” Larry Merlo, CEO of CVS Health, said during the event, as reported byRetail TouchPoints. “Retail pharmacy is quite often the front door to health care, with the highest frequency of patient interaction. The face-to-face interactions between patients and our 30,000 pharmacists and clinicians provide us with an unmatched ability to help change consumer behavior and drive better health outcomes at a lower cost.”