Why CVS Health CEO Karen Lynch wore a ‘taking up space’ T-shirt on her first day

On this week’s episode of Fortune‘s Leadership Next podcast, co-hosts Alan Murray and Ellen McGirt talk with CVS Health CEO Karen Lynch about the company’s two recent multibillion-dollar acquisitions, Oak Street Health and Signify Health; CVS’s push into the primary care market; what it takes to deliver services to people who live in health care and food deserts; and the story behind the T-shirt she wore on her first day on the job.

Listen to the episode or read the full transcript below. 


Alan Murray: Leadership Next is powered by the folks at Deloitte, who, like me, are super focused on how CEOs can lead in the context of disruption and evolving societal expectations.

I’m Alan Murray, and I’m here with my tremendously talented and very healthy…

Ellen McGirt: Very healthy.

Murray: …co-host Ellen McGirt. You are healthy, aren’t you?

McGirt: I am very healthy. And in that vein, we are here with the incomparable Karen Lynch, the CEO of CVS Health, she has topped Fortune’s Most Powerful Women’s list for two years running. Has been a big presence in that space for a long time. And another fun fact, CVS is the highest-ranking Fortune 500 company ever led by a woman. 

Murray: Yeah, Ellen. CVS started as Consumer Value Stores. It now ranks number four, number four, on the Fortune 500 list—and growing since Karen took over as CEO in 2021.

McGirt: Yeah, that’s right, and one reason for that is that she’s initiated a plan to transform hundreds of CVSs, almost 10,000 US stores, into super clinics. Very interesting vision here, making CVS Health one of the nation’s biggest networks of urgent and primary care.

Murray: Yeah, which is what we want to talk about today. In the past six months alone, CVS has made two more multibillion-dollar acquisitions, Oak Street Health and Signify, that is going to further increase their reach into the primary care market.

McGirt: So she’s here with us today to talk about all of those things, and her vision for business and a whole bunch of other stuff. Karen, welcome to Leadership Next.

Karen Lynch: Well, thank you for having me. It’s a delight to be here.

McGirt: You know, Alan, and I typically start off these conversations with the big news of the moment, and Alan teed it up beautifully. There’s plenty of it. But I thought it would be a missed opportunity not to ask the woman who seems determined to transform America’s health care delivery system and become literally a hub for physical and mental health in the country, how she was doing. So Karen, let’s start on a human note. How are you doing?

Lynch: I’m doing great. I, as I said earlier, just celebrated a big birthday and was participating… 

Murray: 40? 40?

Lynch: Yeah, exactly. I’m not going to share it, you can just look it up. So I’m feeling great. I’m still doing the Peloton every day. I actually managed to run a 5k. And as I was telling Alan before the show, I did a Polar Plunge on January 1 at 48 degrees. So all in? Feeling pretty good.

McGirt: It’s awesome. It is such a blessing. Alan, lead us through the news of the day, because these acquisitions are extraordinary.

Murray: Yeah, let’s start with the big one, Oak Street Health. That’s a $10 billion acquisition. It’s very exciting. But it’s a different business than you’ve been in in the past. So, tell us where that’s taking you?

Lynch: Yeah. So, you know, Ellen, Alan, if you just rewind back to December of 2021. You know, we were in the midst of a pandemic, I, you know, kind of took over earlier in that year. And while we were dealing with vaccines, we were repositioning the company with our overall intent to really change the way consumers experience and engage with their health care system. So we laid out a really bold path of really doing an integrated offering. So extending into broader health services. And we said we were going to extend into primary care because primary care is the center of the connection of health care, the pandemic changed the way you know, people were interacting with the health care system so we wanted to extend in the home. The health care system is changing dramatically. We’re moving from a very much a transactional-based health care system, where typically people call it fee for service, to what we call value-based care. And that’s really where primary care comes in. Oak Street is the leader in primary care serving underprivileged and serving Medicare Advantage members. And with that acquisition, plus that you mentioned it earlier, Alan, plus the acquisition of Signify Health. We have the premier payer-agnostic value-based care assets to support Medicare, bar none in the country. And our goal will be to improve health, improve health outcomes, improve quality, improve access and convenience. 

Murray: That really is fascinating. The one thing I want to follow up on: you said “payer agnostic.” I mean, obviously, Aetna is is a health care provider, a health care payer, but you want to provide primary care to all comers.

Lynch: That’s correct. We, you know, some of our competitors are our primary customers in Oak Street and in Signify. Similar to what we do in our pharmacy benefits management company, similar to what we do, we serve all customers in CVS retail, and our intent is to provide primary care for all customers focusing first on Medicare Advantage, because we think you know, that’s the largest population has the highest cost, has the most chronic conditions, we feel like we can have a huge impact on improving overall health outcomes in that population.

McGirt: Tell us a little bit about Signify. As I was preparing for this conversation, I spent more time than I expected to on their website, sort of looking through their offerings, but also understanding how they interacted in vulnerable communities. And I was surprised about their focus, and that a big company would be interested in working with them in this way. Tell us a little bit about it.

Lynch: People throughout the last two years have really changed the way they’ve thought about health care delivery. And people want convenient. That could be through digital connections. That could be through community-based assets, like an Oak Street, or can be in the home. And what Signify does—they are in 50 states—they go into the home and they basically do assessments of your overall health, and then they reconnect you to the care that you need. So imagine sitting across the table and interacting with someone that can help you understand, you know, how your, your blood pressure and talk more about it. They can actually open up a refrigerator door and see what’s in there, you know, kind of food are you eating. And you both know, food is really important, it’s part of your overall health, and if you’re not eating healthy, that’s going to have an impact on your health. And then they can redirect you. What’s interesting about Signify health is 30% of the people that they see either don’t have a primary care physician or have a signed one that they’re not using. Think about the possibility that we have to connect those patients into a primary care asset like Oak Street, or, you know, working with them with our pharmacists and doing medical reconciliations to make sure that their medicines are appropriate for the conditions that they’re having. So again, you see the interplay Signify an important home asset interplays with Oak Street quite nicely, and will intersect with the rest of CVS Health so that we have that connected experience for the consumer. It’s really I’m really excited about the possibilities here. Now we have to close the transactions.

Murray: Yeah, of course. Ellen, by the way, is far too young to be talking about Medicare, but I have my card, I’m ready to go. Do Oak Street Health and Signify replace my primary care physician, the statistic you gave was fascinating that many people my age don’t have a primary care physician. But what if you do?

Lynch: You know, it depends on what plans you pick, what primary care you have. So if you’re in a Medicare Advantage plan, you may pick a product that has Oak Street visit, you know, Oak Street Health primary care available to you, or you keep your own. Love to share a story with you about Oak Street, just to give you a sense for what that primary care experience looks like. When we were going through the transaction, I had the opportunity to go visit one of the clinics, right down the street here in Woonsocket, Rhode Island. And what’s fascinating is they obviously have transportation for those individuals that don’t have a way to get to the doctor. They’ll bring you to the clinic. But what the real sort of benefit that I saw was that it’s more of not just the primary care, it’s a community. There was a woman in there, she’s lonely, she doesn’t have anyone at home. She goes into the community center every single day. And at that point in time, she was making decorations for the community center. And then obviously, she’s getting her care there. And it was just, you know, it’s really what health care should be in the community, you know, easy access and improving her quality of care. And, you know, I talked to her for a little while, and she was just so excited about the people that she meets there and about how she’s getting her follow-up care. And it’s just a different model. And she’s digitally connected to them as well. And it’s just a way to get people to not only keep thinking about their health, but kind of that broader aspect of all parts of your well being and you know, staying connected in the community.

McGirt: So from a philosophical point of view, I do understand the fundamental tension between the fee-for-service model, which we’ve been living with for so long and the value-care model. But on a practical basis, what does it mean to scale an entirely new model of health care delivery when we’re so used to the mechanical version of  if you’re lucky enough to get into the big building, you walk through the treatment, you come out and maybe you’re maybe you’re, well, maybe you’re not, maybe you have no relationship with your health care provider, maybe you do? I’m imagining there’s new ways of training and screening for the right kind of empathetic personnel. There’s new ways of putting safety protocols in place. How does this scale?

Lynch: Obviously, Oak and Signify are big in and of themselves, but I think it scales because we’re improving health outcomes. People are engaging in their care, they’re getting the right care at the right time at the right place, and there’s that connectedness to their overall health. And one of the things that I’ve learned over the course of the last couple of years is that, you know, people are more focused on their health than they ever have been. People want to be connected to their health, they want to live longer lives and the way that you do that is through engagement. And I think with technology, and that’s going to be the critical part of having the ability to scale, is really leveraging the technology that both of these assets have, that we have, you don’t want fee for service to, you know, continue its transaction base, and it’s not really looking at that holistic approach to your care. Then that’s the part that makes it easier to scale, because people are going to want to do this, you know, be involved in this kind of engagement in health. And right now, you tell me, I think you’re both in, you know, probably engaged with the health care system every day. It’s fragmented, it’s difficult, it’s hard. And these kinds of assets, and this kind of approach to health care makes a difference in people’s lives. And that’s really what we’re trying to accomplish.

Murray: How will the clinics relate to the stores? I mean, do you see them ultimately being located adjacent to the stores? Inside the stores? What’s the connection?

Lynch: Yeah, I think there’s a couple ways that we’re thinking about it. You know, there are, you know, stores that we have today in that, you know, we have because they’re in underserved communities, and there would be a pharmacy desert, or maybe a food desert, and we have those stores for those purposes. So those are likely places where we may kind of reposition a store and put an Oak Street Clinic in that particular store. That’s one model. Another model is looking, you know, kind of broadly, where kind of where the population is that you know, meet the criteria, the Medicare Advantage, dual eligibles, underserved communities, where Oak Street is today and then expanding out so that we kind of hit that population. That’s how we’re thinking about it. So sometimes they could be in a store, sometimes they could be close to a store, sometimes they could be adjacent to a store. The way we’re going to use our stores, you know, kind of those pharmacies and those minute clinics is to provide wraparound services, or sometimes when there’s just a convenient get your vaccine, you don’t really need to go to the clinic. And those are the types of things maybe some smaller, urgent types of things that someone might need, we’ll kind of use those stores as the wrap around to bring additional capacity to that Oak Street Clinic.

McGirt: Where does mental and behavioral health fit into your vision?

Lynch: It is front and center. It has to be part of the overall equation. We as a company are very committed to connecting the mental health and the physical health.  Oak Street, as part of their services includes the behavioral health, I don’t think you can think about health without including behavioral health. And when you’re serving, you know, patients, whether they be in Medicare, whether they’re, you know, a woman who’s suffering from postpartum depression, I talk about this often, that women you know, when they have babies, it’s the most joyful time of their life. At the same time, more and more women suffer from postpartum depression. Your care plan should include that conversation and that discussion and those access points for them. And I think, as you know, as kind of health care companies, we have to get better at doing those kinds of holistic care plans so that we’re getting in front of it. So it’s central to how we think about health. It’s central to our platform for health. And it’s central to the long term strategy of this company and it I think, for for the US health care system, it has to be integrated.

[Music starts]

Murray: I’m here with Joe Ucuzoglu, the CEO of Deloitte, US, and the sponsor of this podcast for all three of its seasons. Thank you for that, Joe. 

Joe Ucuzoglu: Pleasure to be here, Alan. 

Murray: Joe, business is facing so many challenges these days: the continued pandemic, the battle for talent, supply chain problems, rising inflation, and now on top of all of that, war in Europe. How are companies responding to all this disruption?

Ucuzoglu: Alan, you’re seeing a remarkable level of optimism in the face of so many varied challenges. And by and large, I’d attribute that to a recognition that this is just the new normal, the constant curveballs that will be thrown at us. But at the same time, given how successfully so many of these organizations have navigated through these things over the past couple of years, a growing confidence that we’ll be able to continue to navigate the issues that get thrown at us and grow our businesses. But to do that, we are absolutely seeing a new brand of leadership emerge, grounded in resilience, in agility, in a learning mindset. These are the most important leadership attributes in an environment where we should just expect that change and disruption are going to be at a consistently high level of intensity.

Murray: Problems aren’t going away, Joe, right? You have to manage through them.

Ucuzoglu: I had a CEO say to me recently that if you put together a list of the top 20 risks one week, something big is going to hit the next week, and it probably isn’t even on that list. And that’s just a reflection of the number of different phenomena in the world right now and the level of complexity that businesses are managing through.

Murray: Joe, thank you.

Ucuzoglu: Alan, it’s a real pleasure.

[Music ends]

Murray: Karen, you have such a personal passion for health. I know that from previous conversations. You can hear it in this conversation. Where does that come from? What’s the secret Karen Lynch story that led you to this point?

Lynch: Well, I don’t know if it’s secret. I talk a lot often about it. But there’s a couple things that have led me here. My mom died by suicide when I was 12. And then my aunt took all four of us, my siblings and I in, and took care of us. She passed away when I was in my mid 20s. And I remember kind of sitting on a hospital bed not knowing what questions to ask, not knowing where to go, not knowing how to help her. That all sort of set sort of my intentions, you know, kind of in the longer term. And then you know, I’ve led a pretty, you know, knock on wood, I’ve lived a pretty healthy life. And then sort of, you know, you know, and Alan, you’ll appreciate this, you know, in my 50s I am, you know, out cycling, and I have like the first major experience with the health care system. It was a bicycling accident where I broke my hip. And I, you know, I’m in the health care system. Well, it was hard, like, there wasn’t a bed available. And, you know, I had to wait for surgeries. That led to a new product idea at Aetna, and I was running out and at the time, but they’ll all those things. And even that just that one experience, sort of with that kind of you know, being young and, you know, thinking about it then to even just the small minor experience I had really drives that passion and that commitment. People come to CVS Health when they’re at their most vulnerable. When you have a health issue, you know, you don’t know what to do. And what I want to do as a company is have you think about CVS Health as your, kind of, place to go. Whether it’s you have insurance needs, whether or not you have care delivery needs, whether or not you have post kind of acute follow up needs, whether or not you need to kind of go talk to a pharmacist, I want you to think about CVS Health first because we have that entire continuum of care to support you in that journey of health. And I want to make it easy, and I want to make it simple, and I want to make it affordable, and have people engage with us in ways that we haven’t thought of before.

McGirt: Alan, I don’t know about you, but I got all my COVID shots and boosters and most of my tests at CVS and not always the same CVS. Alan knows, and I think many of our listeners know, that I split my time in Florida where I’m trying to take care of my elderly mom and navigate all the things that you’ve talked about. And I can see the just the true value of making this system that you’ve described work for everybody, because it is a struggle. And it was wonderful to have a place that was familiar, you know that I could just make an appointment and get the COVID care that I needed, including my questions answered. What were the lessons that CVS learned during the pandemic? Because you really stepped in at a very early moment and decided to get ahead of delivering care at this time.

Lynch: You know, it’s interesting we we had a mom call us and tell us that her mom was, she wanted to recognize CVS Health employees, because one day her mom who had Alzheimer’s, left her house and drove around the neighborhood, and ended up at a CVS that like 10 miles away. And the reason why she went to that CVS is because she went to CVS near her house every day and she felt like, Oh, I know that CVS, I trust that CVS. And we had, we had a brand new colleague, his name was Marcus, and he recognized there wasn’t something particularly right about this woman. And he started talking to her, he realized, like, she needs help. And she, he got her to give, give him her daughter’s telephone number and her name. And he called this this woman and said, Your mom is here and she’s at the CVS. And, you know, he kept her there and wouldn’t let her go. And the mom was so grateful that our colleague was, you know, helping her, you know, to your point Ellen, and you said, it’s that place where it’s convenient. And it’s a trust factor. And you know, that I was pretty proud of Marcus, it was his first day on the job. And, you know, as a result, I was really excited. Oh, aren’t you know, I, and then I created CVS Hero Awards, but that’s a different story. But, you know, to, to your point, what did we learn through the pandemic? You know, we learned that, you know, health doesn’t wait. We have the urgency to act. And that health is that most valuable asset that we all own. And that, you know, we as a company are, you know, there in the community. We’re there in, you know, kind of when people need us the most. And we need to make sure that we’re continually evolving as a company so that we can meet the ever-changing needs of our customers and our patients. 

Murray: Well, you’re certainly evolving very fast, considering you haven’t been in this job that long. And when I look at the Signify acquisition, which gets you into home health care, and the Oak Street Health acquisition, which which gets you into clinics. What comes to mind for me is, oh, the next one is going to be technology, because the power of technology to help keep people monitored from a distance on top, make sure they’re taking their medicine, various things that you can do through connected technology is potentially transformative. How are you thinking about technology in this equation?

Lynch: Yeah, technology is the great enabler of health care. And I’m a firm believer that the future of health care is technology. The good news for us is that the two assets that we acquired have very strong technology stacks. That was one of the criteria that we looked very hard at. You know, when I first started we had very little digital engagement. We’re up to 47, 48 million digital users today. That number needs to continue to expand, but we’ve made really good progress. And we’re using technology not only to interact with consumers, but using it to improve the efficiency and the effectiveness of our colleagues. This is a great story. I have to share a story with you. We put in some new technology in our pharmacy. I go and visit stores, and I don’t necessarily tell them I’m coming. But I just popped in and was asking one of the pharmacy managers, how’s this new tech that we just rolled out doing? And I could tell she was being a little bit politic in her answers to me. So I turned around, and I asked the pharmacy tech, and I said, What do you think? He looked at me and he said, Karen, this sucks. I said, Okay. Then I kind of had this big smile on my face because I was like, all right, he’s telling me the truth. And I said, well, tell me, you know, tell me about it. And so he’s telling me some technical things. I said, all right. I can’t fix that today. But I’m going to come back in a couple of days and I’m going to bring the team that designed this, and I want you to explain to them what is going on with this and why it is not working. I could tell he’s sort of rolling his eyes like, yeah, she’s not coming back. Well, I show up a few days later with the teach team and his eyes literally are bugging out of his head, like, I can’t believe you came back. I said, What do you mean, you can’t believe I came back? Of course, I came back. I need this technology to work for you. Because if it doesn’t work for you, it doesn’t work for 10,000 other stores and then it doesn’t work for our customers. And the team sort of, you know, figured it out. But you know, technology is really important that it works. And that’s the important part. But, you know, it’s things like that, that you really have to go and test and make sure it’s working so that it supports the whole company.

Murray: Well bravo to you. That’s a great story.

McGirt: It is a great story. I know we don’t have you for very much longer, but you mentioned being in food and care deserts. You mentioned having CVS stores and clinics in places where there’s not a lot of support. You know, at that point you get to the heart of the bigger issues, but certainly in the U.S. that the social determinants of health is often the zip code you’re born into. So I’m curious how you think about that, and how you think about making sure that the people who work in these stores in whatever capacity are prepared to really understand the unique, the often unique health care and access needs, that the people that they serve are, and how they can communicate that back to you. It’s not a high-tech solution. It’s a high-touch solution. But you’re such a fixture in these communities, that just seems like an important touch and data point.

Lynch: We view being in the communities as central and, and really social determinants of care is core to what we do. As a company, we invest significantly in housing. We spent, I think, $400 million in the last two years in just investing in in low-income housing so people have access to housing. We have what we call Project Health, where we send mobile vans into underserved communities, and we do screenings for those individuals that may not have access to care, and aren’t comfortable even coming into a CVS Health clinic. And then we kind of talk them through about some of their options. So we’ve spent a lot of time doing that. As a matter of fact, during during the pandemic, one of the things we partnered with MassGeneral on was looking at some communities that were totally under-vaccinated, we went in with, you know, we went in with our mobile van and we took one of the towns in Massachusetts from being the last to being the first in vaccinations. Signify is really going to help with us because we’re going be in the home and we can really assess what’s going on there. And then our pharmacists, one of the things and you know, pharmacy is one of the most utilized health care benefits, our pharmacists are trained to have those conversations around, you know, kind of medical, you know, med pharmacy adherence. We have stores in Miami, they’re our Navarro  stores, where people use our pharmacists as their clinician, and so and they go to our stores and they drink Cuban coffee, and, you know, and they engage with our pharmacists around their helth. I’m not sure the sugar in the Cuban coffee is good for them. But again, it’s that community approach and it’s that engagement and interaction. So across our company, we address this the social determinants in number of ways.

Murray: Karen, I want to change the topic on you a little bit. It’s so great, it’s so encouraging to see a woman running run one of the five largest companies in the country, one of the 10 largest companies in the world. That’s never happened before. It’s very exciting. But why did it take so long? And why aren’t there more women running Fortune 500 companies? I think we’re up to about 10%?

Lynch: Well, I don’t know the reason why. But let me tell you what were some of my experiences. When I was young in my career—and this is a great story—when I was young in my career, I walked into a room, and it was all men. And I said, “Where should I sit?” And the guy looked at me and he said, “You should sit over in the corner, because women just take up space in the boardroom.”

Murray: Ooh. 

Lynch: Right. And so that might give you a sense. I share that story because, you know, when I was named CEO, my I came out in a T-shirt and my husband said, You’re wearing a T-shirt on your first day as CEO? I said, we’re virtual. My shirt said, “taking up space.” I shared this story with our diversity council a couple of weeks ago. And our diversity council, one of our colleagues went home and told her young daughter about the story and about taking up space. Her daughter sent me a note and said we heard your story and I’m a Girl Scout. And at Girl Scouts, we talked about what we can do to take up more space. And they sent me a picture. They all got T-shirts that said, “taking up space.” I was so excited. So I don’t know why. But I do know that those girls, no one will ever tell them that they should sit in the corner because they’re taking up space. And that’s where I think the opportunity lies ahead of us and the future generations to see more women and big powerful leadership positions.

McGirt: I love it. That’s a good story. So, Consumer Value Stores to CVS in 60 years. Can you tell us a little bit before we let you go? What do the next 60 years look like for CVS? When Alan and I get together in 60 years to talk to that CEO then, because we’re so healthy?

Lynch: Wait, can’t I be the CEO in 60 years?

Murray: Yes, yes. You could still be the CEO. 

McGirt: If you want to be. When Alan was talking about, you know, what’s next, I was thinking intergalactic health, you’re going to be running health systems on four or five different planets by then. That could be that too. What’s the legacy?

Lynch: Well, first, our roots, Consumer Value Stores. We started with consumer and value, and we’re sticking to those roots. Value means a little something different to us today. It means access. It means affordability. It means we’re in the communities. But my hope is that we stick to those roots of being customer focused, you know, providing value, providing the delivery of care. And as you think about, you know, the next 60 years, you’ll see a company that’s very tech enabled, that connects with consumers anywhere they want to be. You’ll see that whole continuum of care being delivered. And my hope is that when people think about CVS Health, they’ll think about their health, and they’ll continue to interact with CVS Health as their health care provider.

Murray: So Karen, this Oak Street Health acquisition is very exciting. Clearly, primary care needs to be transformed, is going to be transformed. You’re not the only person trying to do it, right. We have Walgreens invested in VillageMD. We have Amazon investing in OneHealth. Tell us why CVS is going to win.

Lynch: In my view, as I said earlier, I have the continuum of health care. So I have, you know, 100 million people that I interact with through my insurance divisions, I have 5 million people that walk into my store. So I’m touching a third of America already. Health care is incredibly complicated. We know we’re in a good position and a strong position. We’re playing out our strategy because, you know, we have a strong passion to bring our heart to every moment of someone’s health. And we have a passionate team committed that really understands health care. And, you know, we’re going to play our game and we set forth our strategy. I’m confident in our strategy and our our ability to deliver what consumers need and want for their health care.

Murray: Yeah, it’s a compelling argument. What do you think, Ellen?

McGirt: It’s a compelling argument. I’m glad you’re back on the Peloton. I’m glad everything’s going well. 

Lynch: Thank you.

Murray: Really great to have you with us. Thanks so much for taking the time. Great conversation. Amazing things you’re doing. It’s such an interesting moment in your business. Please keep it up.

Lynch: Thank you. Nice to be with you both.

Murray: Leadership Next is edited by Alexis Haut. It’s written by me, Alan Murray, along with my amazing colleagues Ellen McGirt, Alexis Haut, and Megan Arnold. Our theme is by Jason Snell. Our executive producer is Megan Arnold. Leadership Next is a production of Fortune MediaLeadership Next is a production of Fortune MediaLeadership Next episodes are produced by Fortune‘s editorial team.

The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel. Nor does Deloitte advocate or endorse any individuals or entities featured on the episodes.

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