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. This decision comes amid a broader effort by CVS to streamline operations and close certain health centers across the United States. Approximately 80 of the affected positions are located in Illinois, while the remainder are linked to employees in the Chicago office, according to a statement from spokesperson Amy Thibault.
Thibault emphasized that the restructuring aims to enhance operational efficiency and improve services for clients, consumers, and patients. In her statement, she noted, “We regularly look for ways to operate more efficiently to better serve our clients, consumers, and patients.” The initiative is designed to drive high performance, reduce costs, and position the company for future success.
The layoffs are expected to coincide with the closure of 16 Oak Street Health centers nationwide, including one in Chicago, which CVS announced in October. Both the layoffs and the closures are scheduled to take place by February 2024. Thibault did not confirm whether the layoffs are directly related to the center closures but mentioned that affected workers would have the opportunity to apply for other positions within CVS Health.
CVS acquired Oak Street Health for $10.6 billion in 2023. Founded in 2012, Oak Street specializes in providing primary care services to individuals on Medicare, particularly targeting low- to moderate-income seniors in underserved areas.
In recent years, both CVS and Walgreens have sought to expand into the primary care sector, but both companies have made adjustments to their strategies. Walgreens, for instance, invested significantly in the primary care provider VillageMD, with plans to establish Village Medical clinics in 1,000 stores by 2027. However, the company has since reconsidered this plan and is now contemplating the sale of all or part of its VillageMD business.
Despite the challenges facing Oak Street, including rising medical costs and payment issues from insurers, CVS has reaffirmed its commitment to the organization. In a statement released last month, CVS expressed confidence in Oak Street Health and its operational model, indicating that the company would continue to operate 230 centers across 27 states after the planned closures.
As the restructuring unfolds, Oak Street Health faces significant challenges in navigating the evolving landscape of healthcare, particularly in light of changing federal regulations and increasing operational costs. The upcoming layoffs and closures reflect broader trends within the healthcare industry as companies adjust to new economic realities.
