CVS Health (CVS) will spend $20 billion over the next 10 years to upgrade to a more tech-enabled consumer health experience, and the company said it said it would help resolve friction in the troubled healthcare system in the U.S.
Yahoo Finance understands that this investment will not only affect CVS and its vertically integrated businesses, including pharmacies, health providers and insurer Aetna. It will also allow competitors and other players in the industry to plug into the CVS system.
CVS’s plan is built on an idea that has been the focus of change in the industry for years: interoperability. That's how all the different parts of the system talk to each other, ideally, they can be communicated through a single patient record regardless of the company's brand.
Over the years, various governments have tried to encourage the industry to do so, and many startups have tried to develop platforms to host this environment. But for one key reason, all of which have not been successful for one key reason: the company has been reluctant to cheer up.
“The players who can really change healthcare are (incumbent businesses). They have scope, scale, coverage and customer platform and people who trust are willing to undermine themselves,” he said.
Mandadi is accused of leading the change with CVS, one of the larger players in the vertically integrated healthcare sector, with a market cap of $80 billion and annual revenue of $373 billion in 2024.
Mandadi, who spoke with Yahoo Finance today, likens the current health care system to an orchestra, where each musician plays his own tune and listeners try to do it.
"It doesn't work. The first complaint from the client is that there is no convergence of healthcare experience," he said.
The CVS project is underway. But as the topic has been put more seriously in recent months, it is a convergence of factors such as public frustration and the federal government targeting the cost of health care, has incorporated the pressures of change. This includes a public rebound following the December shooting and Trump’s executive order on price transparency.
Mandadi said the company envisions a more proactive approach to health care, rather than having to do all the research and make all the calls.
“Usually, the healthcare experience is when the client is involved first… the healthcare industry responds helplessly. We should pour it on its head,” Mandadi said. “This experience has to be a proactive experience. If we think the problem is brewing, we should stay in touch with the consumer.”
Mandadi said, for example, if a claim is being processed and a potential problem is raised about that claim, the patient will also know, rather than waiting to find out after the rejection.
This looks like text, call or app notification, but the consumer chooses to participate.
The goal of modernization also includes a given patient’s dashboard to give a doctor’s office or CVS pharmacy a full understanding of what is going on, rather than just a single reason for interacting, such as accessing or picking up a prescription.
This provides patients with more opportunities for their healthcare journey, Mandadi said.
Another key area of investment in technology is insurance claims and cost estimates. Currently, many insurers, including Aetna, have methods to estimate costs on their websites or applications, but again, it requires patients to do homework and fact-finding.
To achieve the goal of creating a more aggressive system, the company will have to rely on technology expansion. But that doesn't mean the entire automation of the system, Mandadi said.
"We made some very clear decisions (approximately AI). No. 1, we will never use AI for clinical diagnosis. Second, we will never use AI in any form of denial. Third, we will never use AI to prevent human touch in experience."
One way CVS has used artificial intelligence is to call a pharmacy. If the patient needs an answer but cannot contact the pharmacist and leave a voicemail, the voicemail can be analyzed and a viable solution can be created. For example, if the patient wants to switch to delivery, the system can process it from the voicemail.
Asked about privacy issues and the lack of legislation to support the system’s CVS envision, Mandadi said he believes patients will help drive the change.
He said: “If consumers are willing to share and allow trusted brands, if that makes their experience better.
However, the regulatory environment required to support the system will require traditional healthcare players, federal and state governments, and risk-taking and private equity players to come to the table and create frameworks and funds to support all major companies.
How CVS plans to entangle all components to achieve its ultimate goal is still underway, but Mandadi says the plan could lead to significant changes in consumer healthcare experience in just five years.
“I think health care needs to have an external perspective on the experiences that are appropriate,” he said.
He predicted changes that CVS is planning, and the U.S. healthcare system could be overhauled with support from other legacy players.
"Five years from now on, health care in the U.S. will be very different in the U.S. From now on, this will be unrecognizable due to AI and technology," he said.
Anjalee Kachmli is a senior health journalist at Yahoo Finance, covering all medicines, insurance, nursing services, digital health, PBMS, and health policy and politics. Of course, this includes GLP-1. Follow Anjalee on social media platforms as Anjkhem X, LinkedIn and Bluesky @anjkhem.
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