Oak Street Health, based in Chicago, will lay off 219 employees early next year as part of a restructuring plan initiated by its parent company, CVS Health. The layoffs are expected to occur by February 2024, coinciding with CVS’s decision to close 16 Oak Street Health centers across the United States, including one in Chicago.
According to spokesperson Amy Thibault, approximately 80 of the affected employees are located in Illinois, while the remaining layoffs will impact those who report to personnel at the Chicago office. Thibault stated, “We regularly look for ways to operate more efficiently to better serve our clients, consumers, and patients.” The ongoing restructuring aims to enhance operational efficiency, reduce costs, and position the company for future success.
Affected workers will have the opportunity to apply for other positions within CVS Health, Thibault confirmed. The decision to close health centers is part of a broader strategy by CVS, which acquired Oak Street Health for $10.6 billion in 2023. The closures and layoffs come at a time when Oak Street faces challenges related to high medical costs and complications with insurer payments, as well as changes at the federal level.
CVS’s commitment to Oak Street Health remains firm, with the company asserting that it will continue to operate 230 centers across 27 states after the planned closures. This restructuring reflects a trend in the healthcare sector, where both CVS and Walgreens have sought to expand into primary care in recent years. Walgreens had invested significantly in primary care provider VillageMD with intentions to establish clinics in 1,000 of its stores by 2027. However, it has since reconsidered this plan and is exploring the potential sale of all or part of its VillageMD business.
The changes at Oak Street and CVS come amid a challenging landscape in healthcare, where companies are increasingly focused on adapting to market demands and regulatory changes. As the industry evolves, CVS aims to streamline its operations while maintaining its commitment to providing care for underserved populations, particularly low- to moderate-income seniors enrolled in Medicare.
The upcoming layoffs and health center closures highlight the ongoing shifts within the healthcare sector and the efforts of major players like CVS and Walgreens to navigate financial pressures and operational challenges effectively.
