CVS Health CTO tries to smooth over complexity to propel his company's big bet on healthcare (2024)

Along the way, the company opened thousands of stores and expanded into new businesses, acquiring pharmacy-benefits manager Caremark and insurer Aetna. More recently, it scooped up home-healthcare company Signify Health and primary care provider Oak Street Health.

When Tilak Mandadi joined CVS in 2022 as EVP of ventures and chief digital, data, analytics and technology officer at CVS, there were separate teams running data, analytics, IT, and other technology functions. One of his earliest projects was to combine all of those functions into an integrated organization. He also appointed chief digital technology officers to oversee each of the company’s divisions.

“We have seen the results almost immediately,” says Mandadi. “There’s a much faster execution and decision making, and much more standardization of technologies and the customer experience.”

It turns out that the business silos created due to M&A don’t matter much to customers. They just want a positive healthcare experience, Mandadi says, regardless of the organizational structure at CVS. Today, technology projects are in two buckets—either for a specific business unit, such as Caremark or Aetna, or for the entire enterprise.

One ongoing project reflecting that thinking is a new CVS mobile app that is supposed to blend the company’s various healthcare offerings in one place. The goal is to let 60 million unique digital customers schedule a doctor appointment, plan a visit to a MinuteClinic, or arrange for a vaccine at a pharmacy. The new app is expected to be unveiled later this year, though CVS intends to retain standalone apps for customers who are connected to one part of the business.

“If you are a CVS Health customer, you don’t think in terms of Aetna or Caremark,” says Mandadi. “You think in terms of, ‘I need to find the best pediatrician for my child.’”

When it comes to artificial intelligence, Mandadi says his philosophy is that technology is best when used to “enhance the human touch” while “minimizing human error.” He sees a lot of potential to use AI for administrative tasks, like transcribing conversations during a patient visit, but says that AI won’t be used for clinical diagnosis. That work will remain with a care provider.

CVS works with both Google and Microsoft as it explores AI, but Mandadi also sees value in vertically trained models, which are designed to address a specific problem or industry, like healthcare. “We are building our own vertical models,” says Mandadi. “It is a combination of the two.”

Another part of the business Mandadi oversees, fairly unique for a CTO, is CVS Health Ventures. Established in 2021 for investing in early-stage companies, it mostly focuses on consumer-facing startups, with its investments including cancer-care specialist Thyme Care and healthcare-focused wireless carrier Thrive Health Tech.

“Our philosophy with ventures is that we don’t want to be passive investors,” says Mandadi. “We become an anchor customer for them.”

We end the conversation on the topic of self-checkout in stores. Some retailers, including Target and Dollar General, have been rethinking their strategies related to the technology. Theft has been an issue, and some consumers haven’t been happy with the experience.As a result, some retailers are either removing the lanes completely or restricting when they can be accessed.

Mandadi ultimately sees an important role for self-checkout, but retailers must ensure the tech can handle complex transactions and smooth out pain points, like when a shopper wants to use coupons or redeem rewards. CVS is currently testing computer vision technology in its labs to make self-checkout smarter.

“Standing in line for checkout is awful,” says Mandadi. “If we don’t somehow figure out self-checkout in retail, we’ll lose more to online shopping.”

John Kell

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NEWS PACKETS

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Hackers demand as much as $5M from Snowflake customers. As many as 10 companies that were affected by a hacking scheme that targeted Snowflake’s customers are facing demands of payments of $500,000 to $5 million each, Bloomberg reports, citing a security firm that’s helping with the probe. The hacking group used stolen login information to access the Snowflake accounts, says Google’s Mandiant security business, and illicit data brokers are seeking prices above black market rates for the data that was stolen from Snowflake’s customers.

McDonald’s halts drive-thru AI initiative. The fast-food giant has ended a partnership with IBM that involved using AI to process drive-thru orders. But McDonald's added it will continue to explore voice ordering technologies more broadly and intends to land on a solution by the end of the year. A few restaurant chains have explored AI to help automate some tasks for cashiers, a high stress job that often has low retention. But even with all the advancements of models that aim to replicate human interactions, the AI made so many notable mistakes that the system ended up going viral on TikTok for all the wrong reasons, a sign the technology needs more time to develop before it can be deployed at scale.

ADOPTION CURVE

CIOs seek AI clarity. As chief information officers continue to move their generative AI projects out of test and piloting and into wider adoption, they remain vexed about how to measure success and ensure their investments pay off. A report by CalypsoAI and research firm Everest Group found that nearly three-quarters of enterprise leaders say a lack of clarity on success metrics was the top challenge CIOs face when adopting generative AI, followed by budget and cost concerns (68%), a fast-evolving tech landscape (64%), data security and privacy concerns (55%), and finally, a talent shortage (41%).

“We are seeing a lot of vendors have gen AI offerings that are really expensive,” Neil Serebryany, CEO and Founder of CalypsoAI, tells Fortune. “In a fast-evolving technology landscape, companies aren’t really sure what’s the best model to use and what’s the best vendor for a specific problem or solution.”

JOBS RADAR

Hiring:

- State Bar of California, the administration division of California’s Supreme Court, is seeking a chief information officer based in San Francisco. Posted salary range: $235.5K-$353K/year.

- SAIF Corporation, a not-for-profit workers’ compensation company, is seeking a CTO based in Oregon. Posted salary range: $176K-$293.4K/year.

Hired:

- Gap named Sven Gerjets as CTO, reporting to the apparel retailer’s CEO Richard Dickson. In a note to employees, Dickson said Gerjets joins Gap as it has “just started the journey with data science” and that he will help the company’s push to adopt technologies for operational efficiency, product creation, and customer engagement.

- Booz Allen Hamilton appointed William Vass as CTO, succeeding Susan Penfield, who is retiring after a 30-year career at the defense contractor. Vass will focus on steering the company’s AI, cyber, and software and data-centric capabilities. He joins Booz Allen after most recently serving as VP of engineering at Amazon Web Services.

- Scripta Insights announced David Kershaw has joined the venture-backed digital health company as CTO to spearhead innovation and lead the engineering and IT teams.

- DigitalOcean has named Bratin Saha as chief product and technology officer, where he will lead product strategy, development, infrastructure, and security. Saha joins from AWS, where he served as VP and general manager of AI, machine learning, and data infrastructure.

- Hempel has appointed Emilie Barriau as CTO, joining the protective coatings supplier after 15 years at Henkel Adhesives Technologies. Barriau will propel the company’s efforts to unite research and development, sustainability, and procurement.

- AtlantiCare named Jordan Ruch as CIO, joining the New Jersey-based health care organization after previously serving as CTO at RWJBarnabas Health. Ruch will lead AtlantiCare’s IT efforts and advance the system’s digital strategy.

- S64 announced the appointment of Marcus Glover as CTO, joining the London-based firm with 25 years of experience at firms including Morgan Stanley, UBS, and Deutsche Bank.