Oak Street Health, a primary care provider based in Chicago, will lay off 219 employees early next year as part of a restructuring initiative by its parent company, CVS Health. The layoffs are set to occur by February 2024, coinciding with the planned closure of 16 Oak Street Health centers nationwide, including one location in Chicago.
According to spokesperson Amy Thibault, approximately 80 of those affected are based in Illinois, while the remainder work under management in the Chicago office. In a statement, Thibault explained, “We regularly look for ways to operate more efficiently to better serve our clients, consumers, and patients.” The restructuring aims to enhance overall performance, reduce operational costs, and position the company for future success.
Affected employees will have the opportunity to apply for other positions within CVS Health. This decision follows CVS’s acquisition of Oak Street for $10.6 billion in 2023, highlighting the company’s strategic focus on integrating health services.
Impact of Closures and Layoffs
CVS’s announcement in October regarding the closure of several health centers raises questions about the direct relationship between these closures and the impending layoffs. While Thibault did not clarify this connection, the decision to downsize appears linked to the ongoing challenges within the healthcare sector. Oak Street Health has been grappling with rising medical costs and issues related to insurer payments, compounded by recent changes at the federal level.
Founded in 2012, Oak Street Health specializes in providing primary care services to Medicare recipients, particularly targeting low- to moderate-income seniors in underserved areas. The company’s mission aligns with CVS’s broader strategy to expand its healthcare offerings, reflecting a trend among major retailers to enter the primary care market.
In recent years, Walgreens also pursued a similar strategy, investing significantly in VillageMD to establish clinics in its stores. However, Walgreens has since reconsidered its approach, announcing plans to potentially divest parts of its VillageMD business after a private equity firm acquired the company.
CVS remains optimistic about Oak Street Health’s future, emphasizing its commitment to the company’s proven care model. Despite the upcoming closures, CVS asserts that it will continue to operate 230 centers across 27 states, maintaining its focus on delivering accessible healthcare solutions.
As the healthcare landscape evolves, companies like CVS and Oak Street Health face the dual challenge of managing operational efficiency while meeting the growing demand for quality care among vulnerable populations. The upcoming layoffs are a stark reminder of the pressures within the industry, prompting a reevaluation of how healthcare services are delivered in a changing economic environment.
