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.
Mandadi is charged with leading this change at CVS, one of the larger players in the vertically integrated healthcare space, with a market cap of $80 billion and annual revenue of $373 billion in 2024.
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.
Mandadi said the company envisions a more proactive approach to healthcare, rather than patients having to do all the research and make all the calls.
“Typically, the healthcare experience is the customer engages first … and the healthcare industry reluctantly responds. We should flip that on its head,” Mandadi said. “The experience needs to be a proactive one. And if we think issues are brewing, we should be in touch with the consumer, up front.”
Mandadi said that if, for example, a claim is being processed, and a potential problem is flagged with the claim, the patient would also know, rather than waiting to find out after it is denied.
That would look like texts, calls, or app notifications, however the consumer chooses to engage.
The goal to modernize also includes a dashboard on a given patient to give doctors’ offices or CVS pharmacies a full picture of what is going on, rather than just the single reason for an interaction, like a visit or picking up a prescription.
Mandadi said this opens up greater opportunity for patients to know more about their own healthcare journey.
Another key area the investment in technology is aimed at is insurance claims and cost estimates. Currently, many insurers, including Aetna, have ways to estimate costs on their website or apps, but, once again, it requires the patient to do the homework and fact-finding.
In order to achieve the goal of creating a more proactive system, the company will have to lean on technology expansion. But that doesn’t mean total automation of the system, Mandadi said.
“We made a few very explicit decisions [about AI]. No. 1, we will never use AI for a clinical diagnosis. No. 2, we will never use AI in denials of any kind. No. 3, we will never use AI to prevent human touch in the experience,” he said.
One way CVS is already using artificial intelligence is for calls to the pharmacy. If a patient needs an answer but is unable to connect to a pharmacist and leaves a voicemail, the voicemail is analyzed and can create an actionable solution. For example, if the patient wants to switch to a delivery, the system can process that from the voicemail.
When asked about privacy concerns and lack of legislation to support the system CVS envisions, Mandadi said that he believes that patients will help drive the change.
“Consumers are willing to share and give permission to trusted brands if that makes their experience a lot better. That’s pretty well established. So I don’t think consumers [are] the problem,” he said.
But the regulatory environment needed to support the system will need legacy healthcare players, federal and state governments, and venture and private equity players to come to the table and create the framework and funding to stand up such a huge project for all major companies, Mandadi said.
How CVS plans to exactly wrangle all components to reach its ultimate goal is still in the works, but Mandadi says the plan could result in significant changes in the consumer healthcare experience in as little as five years.
“I think healthcare needed an external perspective on what the experience should be,” he said.
He predicted with the changes CVS is planning, and with other legacy player buy-in, the US healthcare system can be overhauled.
“Five years from now, healthcare would be very materially different in the US. 10 years from now, it would be unrecognizable, because of AI and tech,” he said.
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee as AnjKhem on social media platforms X, LinkedIn, and Bluesky @AnjKhem.
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