Karen Lynch, President and CEO, CVS Health, Interviewer: Alyson Shontell, Editor-in-Chief, FORTUNE
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00:00 Let's get started, and it's fitting
00:01 that our first conversation of the summit
00:04 is with the most powerful woman in business.
00:07 She also happens to be the most powerful woman in healthcare.
00:11 CVS Health President and CEO, Karen Lynch,
00:15 tops Fortune's most powerful women in business list
00:19 for the third year in a row.
00:21 That is no small task.
00:23 (audience applauding)
00:29 Karen is really leading the charge for change,
00:32 and she's on a mission to build
00:34 a better healthcare industry for America.
00:38 We have a lot to discuss with her,
00:39 so let's get right into it.
00:40 Please welcome to the stage,
00:42 Karen Lynch and Fortune's Editor-in-Chief, Alison Chantel.
00:47 (audience applauding)
00:50 - Oh, the energy in this room is so awesome.
00:58 It is so nice to be with all of you tonight.
01:00 Karen, thank you so much for being here with us.
01:01 - Oh, I'm so thrilled to be here,
01:03 and I love being, and honored to be with the amazing women
01:07 and powerful women in this room,
01:09 so thank you for having me.
01:10 - Absolutely.
01:11 So, Karen, yes, you're a woman,
01:13 but you're just plain powerful, okay?
01:16 Karen was our cover of our Fortune 500 issue
01:18 because CVS Health is the number 11
01:21 global 500 company in the world.
01:23 No woman has ever run a company
01:25 anywhere remotely the size of CVS.
01:27 We're talking over $300 billion in revenue.
01:30 (audience applauding)
01:34 So, Karen is the number one on our list
01:37 three years in a row.
01:38 There's no bribing that it takes to be number one.
01:41 It's just the size of the business that you oversee
01:44 is one of the main factors,
01:45 and this lady oversees quite a bit.
01:47 So, Karen, thank you for being here with us.
01:49 - Really thrilled to be here,
01:50 and running a company like CVS Health,
01:53 where, you know, Alan, you said it, we have purpose,
01:57 and that's really kind of what gets all of us
02:01 going every day because we have the purpose
02:03 of really improving the health of all Americans,
02:05 and my belief is there's no better company positioned
02:09 than CVS Health to do that, so thanks for having me.
02:12 - Absolutely.
02:12 So, I wanna talk about how big healthcare has gotten,
02:15 and if it's too big in a little bit,
02:17 but first, let's hear your vision for what you're building
02:20 and why CVS has gotten so big.
02:22 For those of you who haven't been following,
02:23 Karen has been on an M&A spree.
02:26 It might be slowing down a little bit coming up,
02:27 but $19 billion has gone into acquiring companies
02:31 through CVS in the last few years.
02:33 So, what is the vision?
02:36 Is CVS going to be my one-stop shop for health?
02:38 Will I need a primary care doctor in the future?
02:40 Will it be CVS?
02:41 Will someone come to my home from CVS?
02:42 What is the future?
02:43 - Yes, all of that, but let me just take a step back
02:47 'cause I think it's important
02:48 as we think about our strategy,
02:50 you know, I always sort of look to the future,
02:52 and if you think about the next few years,
02:54 we're going to have unprecedented change,
02:57 more change than probably the last 50 years.
02:59 Just look at the US population and the demographics.
03:03 The change that you'll see is both massive
03:07 and it will be extreme.
03:10 You know, the advent of technology is, you know,
03:14 coming upon us faster than a freight train.
03:17 And IBM says that there's two and a half quintillion
03:21 data bytes on a daily basis.
03:24 And then you kind of look at the connectedness world.
03:28 By 2030, 20 billion devices will be connected
03:33 to the internet.
03:35 And having said all of that, healthcare is,
03:40 the costs are unprecedented.
03:43 And if we don't have radical change
03:45 in the healthcare system, we will falter
03:48 and we will fail in the healthcare system.
03:51 And you know, one of the things that, you know,
03:53 I was thinking about, you know, kind of is,
03:55 people say you're reinventing healthcare.
03:57 No, I'm realizing, you know, healthcare.
04:01 'Cause you know, everyone goes, it's reinventing,
04:03 it's reimagination, it's all the re.
04:04 Well, I'm realizing the power
04:06 of what we can do as a company.
04:08 And our vision and our strategy is really about
04:12 building connections in healthcare.
04:15 And we're starting with building multiple channels
04:19 for accessing healthcare that we can build locally,
04:23 but have available nationally.
04:26 We're driving at value-based care versus volume-based care.
04:31 We're driving at consumer connections
04:36 and personal engagement by using technology
04:39 so that people can be connected to their healthcare.
04:43 And we're driving at community convenience.
04:47 Because healthcare isn't about just going to the doctor,
04:51 it's about being in the community,
04:53 having transportation to the doctor.
04:56 It's about being in the home
04:58 and having access to healthy nutrition.
05:01 So essentially, kind of our strategy in a nutshell
05:04 is connecting all the dots for someone
05:08 on their personal healthcare journey.
05:10 And so we will be in the communities,
05:13 we will be in the home, and we will be digitally connected.
05:17 Because we owe it to improve the overall cost,
05:21 lower the cost, improve access,
05:25 and improve quality of the American healthcare system.
05:27 - But doesn't it remain to be seen
05:29 if the big healthcare industry
05:32 actually does mean lower cost, better care?
05:34 I mean, there have been some studies that have shown
05:36 that actually when you consolidate an industry,
05:39 it's not better for those things.
05:41 - Well, I think it's better for health outcomes.
05:45 And if you think about, today,
05:47 there's $320 billion spent on health equity,
05:50 people not getting the right care.
05:53 Our view and my view is that
05:55 if we can have people engage in their healthcare,
05:59 and that they can get the access,
06:01 we'll lower the overall cost
06:03 'cause you're getting the right treatment
06:04 at the right time in the right places.
06:08 And we're helping them navigate the healthcare system
06:10 because every single person in this room
06:12 experiences the healthcare system.
06:14 And in an incredibly fragmented way.
06:17 And so if you think about CVS Health,
06:20 your journey, you worry about access to financing.
06:25 We have the insurance so we can keep that sort of,
06:27 if you're afraid that you can't afford it,
06:31 we have the insurance.
06:33 We have the benefits of pharmacy.
06:35 And then we have the care through our recent acquisitions.
06:39 I don't know if it was a spree, but it was a lot of money.
06:42 (audience laughing)
06:42 And our recent acquisitions, care in the home,
06:47 care by PCPs, care in the communities.
06:51 Clearly we have that opportunity to lower costs
06:54 and improve quality of healthcare in America.
06:57 - And you've said that the demographic
06:59 is changing in our nation.
07:01 And a lot of the places you've been acquiring
07:04 have been in the Medicare space, the Medicare targeted age.
07:07 You've said there's a Medicare tsunami coming.
07:09 - That's right.
07:10 - Can you just explain that a little bit more?
07:11 - So what's happening is today,
07:13 people between the age of 54 and 64,
07:18 there are more people in that age group bracket
07:21 than over 65.
07:23 So that age, me included, will be moving into over 65.
07:28 So because there's so many people,
07:30 there's gonna be so much more pressure
07:33 on the healthcare system.
07:34 Because 40% of Americans have one chronic condition.
07:39 60% of Americans have two or more chronic conditions.
07:44 Imagine the access they need,
07:48 the pressure that that will put
07:50 on the entire healthcare system.
07:52 We have to find a better way.
07:54 - I wanna talk about some of the acquisition strategy
07:58 a little bit.
07:59 But really, I mean, this is an incredibly competitive space,
08:03 very high deals in size.
08:06 What's your, how do you win a deal?
08:08 What's your strategy when you're courting someone?
08:11 How do you make them come to CVS and to you?
08:13 'Cause you've done this over and over and over again.
08:15 - Yeah, I think the first thing is,
08:17 what's your business strategy?
08:18 What are the capabilities that you need?
08:21 You always do a strategy of build versus buy.
08:24 And then when you look at sort of the acquisition,
08:30 it's okay, how does it fit?
08:32 Is it strategic?
08:33 Does it fit strategically?
08:35 Can you operationally connect it to your business?
08:40 And does it financially make sense?
08:43 And you always have to have those three things
08:46 when you're looking at any acquisition.
08:48 And we picked the acquisitions we picked
08:51 because we looked at our business.
08:53 We said, we're seeing an aging population.
08:58 We know people don't have access to primary care.
09:01 We know that value-based care is where it's going.
09:05 We know that there's been a renaissance in home.
09:09 And that's why we bought sort of the home business
09:11 that we bought as well.
09:12 So that kind of how we approached our acquisitions.
09:16 - And another goal is to make it much simpler
09:19 because the health process is really complicated
09:21 for many, many people.
09:23 How can technology solve that?
09:25 - Yeah, I think the important thing about technology,
09:27 and if you look at what's happening today
09:30 with artificial intelligence,
09:32 I think there's a lot of uncertainty,
09:36 but there's a lot of power with artificial intelligence.
09:39 And so as we think about the opportunities in healthcare,
09:42 artificial intelligence, there's a couple of things.
09:45 One is we'll see improved patient engagement
09:47 because we're using technology to connect.
09:50 We'll see better diagnosis.
09:52 There's actually been a recent study coming out of Sweden
09:55 that talks about how artificial intelligence
09:57 helped with radiology, 20% more insight into cancers.
10:02 And those are the good things.
10:06 We're regulating at the same time that we're creating.
10:11 And it's our responsibilities as leaders
10:14 to make sure that we do responsible artificial intelligence.
10:19 And I think about it kind of as the Hippocratic Oath,
10:21 do no harm.
10:22 And in our view in healthcare, there's three Ps.
10:26 It's powerful, it's personal, and it's productive.
10:31 From a personal perspective, it's,
10:34 hey, I can use it to engage and get really insights,
10:37 but I need to protect those individuals' privacy.
10:41 Productive, I say, we can use it to bring better information
10:45 and better tools to our healthcare workers,
10:48 but at the same time, we can't lose the human element
10:53 of interactions in healthcare.
10:55 So that'll be really critically important for us.
10:59 And then it's powerful, but we need to use it
11:02 for the betterment and the good.
11:04 And so that we can use it for,
11:07 how can I understand social determinants?
11:10 Are there ways for us to improve health outcomes?
11:14 But it really, I mean, I don't know if anyone
11:17 watched 60 Minutes last night.
11:19 I'm showing my age probably, but if,
11:21 definitely showing my age.
11:23 But if you listen to the 60 Minutes program last night,
11:27 he's kind of, there was a gentleman talking,
11:29 he actually was one of the initial founders of AI.
11:33 He talked about how uncertain it was
11:36 and a little bit how scary it could be.
11:38 So it's our responsibility to make sure
11:40 that we have responsible AI.
11:43 - So we talked about, even before we came on stage,
11:46 purposeful leadership, and that also means
11:48 not just taking care of your shareholders
11:50 and the environment and many, many other things,
11:52 your employees as well.
11:54 There was an incident in recent weeks
11:56 where some of your employees staged a walkout.
11:59 It shut down some of the stores,
12:01 and they were fighting for safer conditions
12:03 and just better work environments.
12:06 How, you're in a very powerful seat.
12:09 You touch 110 million lives with your company every day,
12:11 300,000 employees.
12:13 What can you promise and what can you do in your position
12:16 to help that situation?
12:18 - Yeah, so I think you have to look at the environment.
12:20 The entire environment, you look at UAW, you look at Kaiser,
12:25 there's just a lot of unrest in healthcare.
12:30 You know, we, you know, through the pandemic,
12:33 you know, we're still, you know, some of our pharmacists
12:35 are still feeling some of that burnout.
12:37 I would say the other thing that sort of impacted it
12:39 was we had unprecedented demand for COVID-19 vaccines.
12:44 And we're at the same level of demand
12:49 that we were in 2021.
12:52 So one of the things that we're--
12:54 - With boosters?
12:55 - Yeah, with the boosters, yeah, right now.
12:57 So we're doing more per day than, you know,
12:59 some days we're doing more per day than we were back then.
13:03 So there's been incredible demand.
13:05 So what we're doing is, you know,
13:08 we're obviously increasing our scheduling,
13:10 putting pharmacists, we have 30,000 pharmacists,
13:14 and sometimes we don't get it right in certain markets,
13:17 and we address that market.
13:19 And, you know, we didn't actually close any stores.
13:23 We were able to keep them all open.
13:25 We actually brought in other pharmacists
13:27 because in the end, you know,
13:29 we have a responsibility and an obligation to people
13:33 that they get their prescriptions
13:35 and they get access to health.
13:37 And we're all rallied around to make sure
13:39 that that's happening at the same time
13:41 supporting our colleagues.
13:43 - So for people who don't know your backstory,
13:48 quite a story growing up, a lot of resilience in it.
13:53 You had a mother who died by suicide.
13:55 You were raised by an aunt who then died in your 20s,
13:59 and that first made you interested in the healthcare system
14:02 and navigating it better.
14:03 You were told early on in your career
14:05 that women take up space in boardrooms
14:08 and that, like, you didn't belong, which is,
14:10 of course, crazy.
14:11 And now you are sitting here as the most powerful woman
14:15 to ever run a business in the history of businesses.
14:19 What's your--
14:20 (audience applauding)
14:24 A little career domination advice for everybody?
14:28 - Yeah, don't let your past or any setbacks or any failures
14:33 take the power away of the future that's in front of you.
14:38 That would be my best advice to you.
14:39 - Amazing.
14:40 Thank you, Karen, thank you, all of you,
14:42 and have a great time eating your dinner.
14:44 (audience applauding)
14:47 [BLANK_AUDIO]