Oak Street Health, a Chicago-based healthcare provider, announced it will lay off 219 employees as part of a restructuring initiated by its parent company, CVS Health. The layoffs are scheduled to take place by February 2024 and will primarily affect staff in Illinois, where approximately 80 workers are based. Other affected employees report to personnel at the Chicago office, as confirmed by spokesperson Amy Thibault in a recent statement.
In the statement, Thibault emphasized CVS’s commitment to improving operational efficiency, stating, “We regularly look for ways to operate more efficiently to better serve our clients, consumers, and patients.” The restructuring aims to enhance performance, reduce costs, and position the company for future success.
Impact of Store Closures and Layoffs
The announcement follows CVS’s decision to close 16 Oak Street Health centers across the United States, including one in Chicago, by February 2024. While Thibault did not clarify whether the layoffs are directly tied to these closures, CVS is encouraging affected workers to apply for other positions within the company.
CVS acquired Oak Street Health for $10.6 billion in 2023, underscoring its strategy to expand into primary care services. Founded in 2012, Oak Street Health specializes in providing primary care to Medicare recipients, particularly targeting low- to moderate-income seniors in underserved communities.
Market Challenges and Strategic Adjustments
The restructuring effort comes at a time when both CVS and Walgreens have faced challenges in the primary care market. Walgreens, for instance, had previously invested heavily in primary care provider VillageMD, with plans to establish Village Medical clinics in 1,000 stores by 2027. However, the company has since reconsidered its strategy and is exploring the possibility of selling all or part of its VillageMD business after being acquired by a private equity firm, which took it private.
In a statement last month, CVS reaffirmed its belief in Oak Street Health and its operational model, asserting that the company would maintain 230 centers across 27 states following the closures. Nonetheless, Oak Street has been grappling with rising medical costs, payment challenges from insurers, and regulatory changes at the federal level.
As CVS navigates these complex market dynamics, the layoffs and store closures reflect broader trends in the healthcare industry, where companies are increasingly seeking to streamline operations and adapt to evolving economic realities.
