Opening facts: Smoking kills 4,300 Coloradans annually. Smoking-related government expenditures cost each Colorado household $570 annually.
When a for-profit corporation says, “We feel it’s important to give back to our community,” I rarely believe it. Instead, a filter in my brain automatically switches on, translating the corporate spin into the truth: “We feel it’s important to be perceived as giving back to our community because it helps our real goal, making money for our shareholders.”
By the way, there’s nothing wrong with that. America’s high standard of living owes more to our free enterprise system than anything else.
But I’ve never been fond of the amnesiac language of business charity, as if the profit motive plays no role.
When CVS Caremark announced last week that its 7,600 U.S. stores would cease selling tobacco products, I began to doubt my filter. Did I just witness a company serving the greater good regardless of self-inflicted damage?
The damage was huge. CVS stock dropped 1.5 percent on the news. The company estimates they will lose $2 billion in annual revenue, not including other products no longer purchased by tobacco shoppers during a typical visit.
I couldn’t believe it. Shareholders invest in a company to make money, plain and simple. The CVS decision defies their wishes. I had to understand why. What I learned boosted my commitment to free enterprise, and to CVS.
I began by hearing from the horse’s mouth.
Larry Merlo, CVS president and CEO, explained the decision in a recorded statement. First, he described their stores as “a setting where health care is delivered.” That’s a twist. I’ve always thought of pharmacies as places where health care products are sold, but health care delivered? Merlo’s statement paints a picture of the future CVS sees for itself, “as a health care company.” That’s bold talk for a retailer, but honest.
He continued, “CVS Caremark is playing an expanded role in providing care through our 26,000 pharmacists and nurse practitioners.” Wow. Would “nurse practitioners” have received such airplay in a pharmacy’s public statement 10 years ago? I doubt it. Merlo goes on, “… we are helping patients manage conditions like high blood pressure, high cholesterol, and diabetes… conditions made worse by smoking.” Then he summed up: “[We are] positioning us for a growing role in the health care delivery system.”
Brilliant on two fronts, first as a business decision. The profit motive is alive and well at CVS, and that’s good. Shareholders should recognize that the company is pursuing a bigger slice of the $2.8 trillion Americans spend annually on health care. They might succeed because the costs of traditional routes to health care — doctors and medical facilities — are skyrocketing. Cheaper alternatives, such as from pharmacies, are becoming more attractive. Where did you get your flu shot?
And it’s a brilliant decision for society. When the profit motive aligns with a societal goal, amazing things can happen.
Now, will a Colorado teenager decide to forgo smoking because of the CVS decision? Unlikely. But the cumulative effect of a society slowly rejecting a deadly practice can have a huge impact. In the 1970s, 40 percent of American adults smoked. Now it’s just over 18 percent, even lower here in Colorado, and dropping.
So, a savvy business decision, articulated as such. How refreshing. And as a result, Americans might get healthier.