CVS Health expects to cut close to 3,000 jobs in efforts to cut costs, according to their annual report. The drug store and pharmacy chain reports struggling due to reimbursement rates for prescription drugs. The franchise has also been impacted by customers purchasing snacks and household items from other retailers such as Amazon, Walmart, Target and dollar-value stores.
In an effort to curb their losses, the company has committed to a multi-year initiative to achieve $2 billion in cost savings. This year’s layoffs represent less than 1% of the company, although last year they announced that they would be laying off approximately 5,000 employees and closing around 900 stores between 2022 and 2024. The company also plans to incorporate more artificial intelligence via robotics into its operations. Despite their efforts to further reduce costs and improve the shopper experience, here’s how the CVS layoffs will affect employees and customers.
How Will The CVS Layoffs Affect Employees?
CVS has reported that the layoffs of 2024 (and 2023) are not front-line, customer-centric jobs. Pharmacies and distribution centers are said to not be affected by the layoffs. CVS spokesperson Mike DeAngelis also confirmed that the corporate employees who will be losing their jobs are set to receive severance pay and benefits, as well as access to outplacement services.
Another option that reports say the pharmacy chain might be considering is breaking up the company‘s pharmacies from their insurance sectors. When asked to speak to the claim, the CVS spokesperson declined to comment. A third-consecutive quarter of cuts has pushed shareholders to demand change that has impacted corporate employees and that may impact customers as well.
How Will Customers Be Affected By The CVS Layoffs?
Customers reportedly won’t feel much of the layoffs since they won’t be impacting any of the customer-facing roles. Still, a $10.6 billion deal with Oak Street that CVS completed last year will help the company better serve customers through an expansion of their health care services. Oak Street Health runs primary care centers for lower-to-middle income customers who have Medicare Advantage plans.
These plans, for customers who are 65 and older, are a part of a privately run federal government program. Along these lines, the federal government has expressed an interest in cutting health costs while improving health outcomes for those with Medicare health plans. Lowering medical costs will allow CVS to move toward achieving the $2 billion cost savings goal, increasing value for shareholders and helping them to better serve customers.
The CVS Layoffs: What To Keep An Eye Out For
A financial analyst confirmed that pharmacy stores are facing the most problems within the company’s sectors. Though CVS plans to expand their health care services, it’s uncertain whether this alone will lead to more cost savings. Still, the company is reportedly considering all options to prevent changes within the company from impacting more employees. CVS continues to operate more than 9,000 stores that, over the next several quarters, may or may not feel the impacts of their corporate cuts and incorporation of AI.
