The announcement Monday by CVS Health Corp. that it would purchase Target's pharmacies and clinics for $1.9 billion represents a major acceleration in the retail clinic revolution. Since the concept of having a small, walk-in doctor's office inside a store made its debut in the American market in 2000, millions of consumers have taken advantage of the convenience of being able to get a flu shot, refills for prescriptions, and treatment for things like ankle sprains or a cough at the same time they are shopping.
The deal will give CVS -- already the largest provider of retail medical clinics in the country with nearly 1,000 locations in 31 states and the District of Columbia -- 80 more locations. Over time, CVS is expected to expand the presence of its MinuteClinics at even more of Target's nearly 2,000 locations. CVS will also take over operations of 1,700 Target pharmacies as a store within a store and rebrand them as CVS/pharmacy.
“At Target, we’ve talked a lot about the evolving preferences of our guests and this partnership demonstrates that we’re committed to putting them at the forefront of everything we do,” Brian Cornell, Target chairman and CEO said in a news release. “By partnering with CVS Health, we will offer our guests industry leading health care services, and at the same time, sharpen our focus on elevating the way we deliver wellness products and experiences to our guests.”
Retail clinics represent a small but fast-growing segment of the primary-care market. According to a report by Manatt Health, they represented 2 percent of primary-care interactions, but their cost was one-third that of traditional outpatient visits.
For consumers, there's both potential good and bad in the Target-CVS deal.
- Convenience, convenience, convenience. More locations means more places to get treatment and possibly less waiting times.
- Cost. CVS will continue to offer $4 and $10 generic drugs to cash-paying guests which will be extended to CVS clinics at Target stores.
- Safety. It will also allow more locations to share information about your health history and prescription drugs which could help minimize the potential for negative drug interactions.
- Cost. Will less competition in the market mean higher prices?
- Less competition. The transaction combines the No. 1 provider of retail clinics with the No. 5 provider.
- Conflicts of interest. During a conference calls with investors on Monday, Target officials said they are "committed to growing prescriptions" in their stores, and that they expect the transaction to "improve script counts." Some analysts worry that medical professionals staffing retail clinics could face pressure to overprescribe in order to boost their employers' bottom lines.