Doctor holding red stethoscope
Photo: Unsplash

CVS has let go of 5,000 of its employees, CNN Business reports, and this comes after the retailer announced that 900 of its stores were to be closed in 2021. It appears that CVS is taking drastic measures in order to cut its costs, and its quarterly earnings report will reveal more information about its current standings.

These layoffs are said to affect “non-customer facing positions,” or in other words, primarily employees at the corporate level. The Rhode Island-based company stated, “We do not expect there to be any impact to our customer-facing colleagues in our stores, pharmacies, clinics, or customer services centers.” 

CVS claims these decisions will help continue the long-term success of the company. As explained by The Wall Street Journal, the “healthcare giant wants to trim corporate roles and spending on travel and its use of consultants. It is also stopping certain business initiatives and using technology to increase productivity. Employees affected will receive severance pay, benefits, and help with landing a new job elsewhere.”

The report claims that these moves are a result of CVS’s plan to transition into healthcare and treat patients with “1,100 walk-in clinics nationwide. It also owns one of the country’s biggest health insurers and the nation’s largest pharmacy-benefit manager.”

Earlier in 2023, CVS closed a deal to buy Oak Street Health for $10.6 billion, which owns a host of primary-care clinics focused on seniors.

This event took place after the drugstore brand made a move in 2022 “to acquire home-healthcare company Signify Health Inc.,” according to another WSJ report. This acquisition came with 10,000 contracted clinicians and doctors and helped CVS coordinate “medical care for millions of Americans.”

Changes to the healthcare industry are taking shape as retailers like CVS and Amazon have started “acquiring companies and announcing partnerships to speed their push into healthcare delivery. The deals could transform the industry and the patient experience, but they could also be disastrous and highly-public failures,” according to Forbes.

Forbes also reports that “Amazon is expanding its virtual healthcare clinic to all 50 U.S. states,” and “the expansion of the virtual clinic comes just months after Amazon closed its $3.9 billion acquisition of One Medical, which gave the retail giant entrée into local community healthcare systems for in-person healthcare services.”

It appears that the race is on for the next highly contested sector since, as Forbes notes, “Amazon’s push into healthcare comes as more established rivals CVS Health, Walgreens and Walmart spend billions of dollars adding healthcare services to their stores, including doctor-staffed clinics and home care.”

The e-commerce leader has other interests at stake with the recent expansion of its virtual healthcare clinics and One Medical acquisition. Both of these strategic moves “could also help Amazon gain more relationships with prescribing physicians needed to boost prescriptions for Amazon’s growing Amazon Pharmacy business, which the retailer entered with its 2018 acquisition of PillPack.”

This means that there’s a very real possibility that one day soon a patient can go to either a CVS or Amazon for their one-stop health needs. Imagine being able to ask Alexa for a virtual doctor’s appointment, hopping onto a video call with a physician, and then getting your prescription at your front doorstep via Amazon Prime shortly afterward.

One thing’s for certain, CVS is paying close attention to Amazon as one of its main competitors, and these layoffs might be another sign that the pharmacy drugstore is ready to play ball.

Currently, CVS employs approximately 300,000 people, primarily in the United States.

BrainTrust

“The medical industry is ripe for disruption. The notion that entire hospital systems could be owned by private brands is not a farfetched idea.”

Dave Wendland

Vice President, Strategic RelationsHamacher Resource Group


“The direction of these private company model evolutions indicates there is more money in people being sick than there is in keeping them well.”

Susan O’Neal

General Manager, Promo Intel & Insights, Numerator


“There’s room for both CVS and Amazon in the healthcare landscape. These layoffs signal that CVS is reprioritizing in efforts to evolve with the direction of the industry.”

Melissa Minkow

Director, Retail Strategy, CI&T

Discussion Questions

DISCUSSION QUESTIONS: Does this correlation foreshadow a heated competition that will benefit patients or have negative effects? Could the future of healthcare involve entire hospital systems owned by private brands like Amazon and CVS?

Poll

Do you think this attempted disruption of the medical industry by CVS and Amazon is a good thing?

View Results

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15 responses to “CVS Lays Off 5,000 Employees as Amazon Virtual Clinics Expand”

  1. Neil Saunders Avatar
    Neil Saunders

    The medical industry needs disrupting. It is overly complex and not always responsive to customers. The entry of Amazon and CVS – both retailers that understand consumers – should be welcomed on the grounds that they increase choice and improve competition. As for the job cuts at CVS, they are not entirely surprising. The group has made a number of acquisitions and despite growing revenue is struggling to grow the bottom line. The business is a bit bloated and could be leaner and better organized. 

    1. Gary Sankary Avatar
      Gary Sankary

      I am not ready to welcome Amazon into the health care space quite yet. There are serious privacy issues around this venture. Amazon is a third party here, not the provider. They connect the consumer with the provider and, as such, are not subject to the same HIPPA requirements. They will use the service to harvest even more data about their customers and, given their track record with privacy.. I expect a challenge to this strategy in the courts in the future. We’ll see.
      100% agree with you on CVS’s business needing to be streamlined. From personal experience, they really need to look at their rewards and pharmacy systems, loaded with errors and poor experiences for customers.

      1. Neil Saunders Avatar
        Neil Saunders

        Which is why having choice is a wonderful thing. We can use the companies we like and are comfortable with and avoid the ones we don’t. Personally, I would have no issue in using Amazon. Each to their own!

  2. Gary Sankary Avatar
    Gary Sankary

    It feels like CVS is using Amazon as a smokescreen to justify layoffs that have been overdue for a while.

    1. Allison McCabe Avatar
      Allison McCabe

      Gary, that was my reaction as well. The inability to easily shop a CVS due to locked down products and the frequent out of stocks for once reliable items has to have impacted profit and revenue. Amazon is getting the day to day business and must be a factor in these layoffs.

    2. Scott Norris Avatar
      Scott Norris

      On the one hand, better tech for diagnosis and treatment should lead to lower costs and dispersed care, which should play to retailers’ strengths. On the other hand, healthcare is one of the industries where you really do require labor and equipment overcapacity all the way up and down the chain – as we all just experienced. If on average you only have three ICU beds occupied you don’t design your floor to have only three beds and staff for that – people will die. So while I welcome private innovation and retail convenience, I am not counting on it to overhaul medicine.

      1. Gene Detroyer Avatar
        Gene Detroyer

        If better access leads only to quicker diagnosis, it is a big win.

  3. Dave Wendland Avatar
    Dave Wendland

    One doesn’t have to look far to see the healthcare landscape continuing to evolve — quickly. AMA’s recent acknowledgement (https://www.healthpopuli.com/2023/08/03/the-doctor-will-see-you-now-at-home-the-ama-launches-a-health-at-home-framework/) that delivering care in the home has emerged as not only a possible solution to points of friction, but a way to transform patient care.

    I agree with @Neil Saunders that the medical industry is ripe for disruption. The notion that entire hospital systems could be owned by private brands is not a farfetched idea. Who ever thought that retail and healthcare would no long be an oxymoron?

  4. Susan O'Neal Avatar
    Susan O’Neal

    There is something about the symbiotic relationship between what we eat, what we drink and the outcome being our health that makes me wary – as a consumer – when I see the traditional retail model taking evolving into a healthcare model in this way. The direction of these private company model evolutions indicates there is more money in people being sick than there is in keeping them well.

    1. Dave Wendland Avatar
      Dave Wendland

      You may be right, @Susan O’Neal, however I believe there are four health and wellness goals that are not being completely met in today’s dysfunctional model. They include: 1) Staying Well; 2) Recovering Quickly; 3) Managing a Chronic Condition; and 4) Caring for a Loved One. Until a model emerges that addresses these well, there is a need to test all possible models … including retail healthcare delivery.

  5. Melissa Minkow Avatar
    Melissa Minkow

    There’s definitely room for both CVS and Amazon in the healthcare landscape- the current system isn’t working for so many. These layoffs signal to me that CVS is reprioritizing in efforts to evolve with the direction of the industry. All this said, my main concern is if either of these companies will establish models that expand accessibility, versus maintaining the status quo and simply providing more options to those who can already find their way to healthcare resources whenever needed.

  6. Gene Detroyer Avatar
    Gene Detroyer

    If you have ever experienced healthcare in France, Canada, Italy, or China, you know the U.S. system is badly broken. It is a system built on money and not well-being.

    More than 25% of citizen expenditures are spent on healthcare. Yet, the U.S. ranks in the mid-30s of advanced countries in healthcare outcomes.

    If we can’t change the system, perhaps with some new competition and new thinking by CVS and Amazon, the U.S. can reduce the cost and increase the positive outcomes.

  7. DeAnn Campbell Avatar
    DeAnn Campbell

    We’re going to see a lot more layoffs in companies across all retail sectors over the coming 24 months as businesses move to adopt new business models and new value propositions. Both CVS and Walmart have laid off staff to reset the company around health care. The Gap laid off thousands to rebuild as a digital only company. Whether these moves will prove to be the right decision remains to be seen, but we’re going to see many more sweeping changes in skill sets before the dust settles.

  8. BenedictEnterprisesLLC Avatar
    BenedictEnterprisesLLC

    When you compare our healthcare system to that of other developed nations, it feels like a little disruption from that retail industry might be a good thing that drives costs down and service up.

    However, within the healthcare retail space, this article focuses on the competition between two rivals in the space. We can’t be sure what aspect of competition caused CVS to reduce corporate headcount, and certainly, Amazon has had its share of layoffs recently. As such, the discussion question is hard to answer confidently until we know more about the “root cause” of this action.

  9. Craig Sundstrom Avatar
    Craig Sundstrom

    The way the Daily Poll was phrased, methinks, has a lot to do with how people answered it. Describe it as “disruption” and many – namely those of us who still see “disruption” as a negative thing – will say ‘bad’; but phrase it as “Will the entry of CVS and Amazon into the medical industry…” and the needle oft swings to ‘good’.
    Of course the phrasing is perhaps a reflection of how one views the motivations here: are they really interested in improving things, or just in it for a fast buck? My view of Amazon ?? I’m not a hater… nor lover, either.

15 Comments
oldest
newest
Neil Saunders
Neil Saunders
6 days ago

The medical industry needs disrupting. It is overly complex and not always responsive to customers. The entry of Amazon and CVS – both retailers that understand consumers – should be welcomed on the grounds that they increase choice and improve competition. As for the job cuts at CVS, they are not entirely surprising. The group has made a number of acquisitions and despite growing revenue is struggling to grow the bottom line. The business is a bit bloated and could be leaner and better organized. 

Gary Sankary
Gary Sankary
  Neil Saunders
6 days ago

I am not ready to welcome Amazon into the health care space quite yet. There are serious privacy issues around this venture. Amazon is a third party here, not the provider. They connect the consumer with the provider and, as such, are not subject to the same HIPPA requirements. They will use the service to harvest even more data about their customers and, given their track record with privacy.. I expect a challenge to this strategy in the courts in the future. We’ll see.
100% agree with you on CVS’s business needing to be streamlined. From personal experience, they really need to look at their rewards and pharmacy systems, loaded with errors and poor experiences for customers.

Neil Saunders
Neil Saunders
  Gary Sankary
6 days ago

Which is why having choice is a wonderful thing. We can use the companies we like and are comfortable with and avoid the ones we don’t. Personally, I would have no issue in using Amazon. Each to their own!

Gary Sankary
Gary Sankary
6 days ago

It feels like CVS is using Amazon as a smokescreen to justify layoffs that have been overdue for a while.

Allison McCabe
Allison McCabe
  Gary Sankary
6 days ago

Gary, that was my reaction as well. The inability to easily shop a CVS due to locked down products and the frequent out of stocks for once reliable items has to have impacted profit and revenue. Amazon is getting the day to day business and must be a factor in these layoffs.

Scott Norris
Scott Norris
  Gary Sankary
6 days ago

On the one hand, better tech for diagnosis and treatment should lead to lower costs and dispersed care, which should play to retailers’ strengths. On the other hand, healthcare is one of the industries where you really do require labor and equipment overcapacity all the way up and down the chain – as we all just experienced. If on average you only have three ICU beds occupied you don’t design your floor to have only three beds and staff for that – people will die. So while I welcome private innovation and retail convenience, I am not counting on it to overhaul medicine.

Gene Detroyer
Gene Detroyer
  Scott Norris
6 days ago

If better access leads only to quicker diagnosis, it is a big win.

Dave Wendland
Dave Wendland
6 days ago

One doesn’t have to look far to see the healthcare landscape continuing to evolve — quickly. AMA’s recent acknowledgement (https://www.healthpopuli.com/2023/08/03/the-doctor-will-see-you-now-at-home-the-ama-launches-a-health-at-home-framework/) that delivering care in the home has emerged as not only a possible solution to points of friction, but a way to transform patient care.

I agree with @Neil Saunders that the medical industry is ripe for disruption. The notion that entire hospital systems could be owned by private brands is not a farfetched idea. Who ever thought that retail and healthcare would no long be an oxymoron?

Susan O'Neal
Susan O’Neal
6 days ago

There is something about the symbiotic relationship between what we eat, what we drink and the outcome being our health that makes me wary – as a consumer – when I see the traditional retail model taking evolving into a healthcare model in this way. The direction of these private company model evolutions indicates there is more money in people being sick than there is in keeping them well.

Dave Wendland
Dave Wendland
  Susan O’Neal
6 days ago

You may be right, @Susan O’Neal, however I believe there are four health and wellness goals that are not being completely met in today’s dysfunctional model. They include: 1) Staying Well; 2) Recovering Quickly; 3) Managing a Chronic Condition; and 4) Caring for a Loved One. Until a model emerges that addresses these well, there is a need to test all possible models … including retail healthcare delivery.

Melissa Minkow
Melissa Minkow
6 days ago

There’s definitely room for both CVS and Amazon in the healthcare landscape- the current system isn’t working for so many. These layoffs signal to me that CVS is reprioritizing in efforts to evolve with the direction of the industry. All this said, my main concern is if either of these companies will establish models that expand accessibility, versus maintaining the status quo and simply providing more options to those who can already find their way to healthcare resources whenever needed.

Gene Detroyer
Gene Detroyer
6 days ago

If you have ever experienced healthcare in France, Canada, Italy, or China, you know the U.S. system is badly broken. It is a system built on money and not well-being.

More than 25% of citizen expenditures are spent on healthcare. Yet, the U.S. ranks in the mid-30s of advanced countries in healthcare outcomes.

If we can’t change the system, perhaps with some new competition and new thinking by CVS and Amazon, the U.S. can reduce the cost and increase the positive outcomes.

DeAnn Campbell
DeAnn Campbell
6 days ago

We’re going to see a lot more layoffs in companies across all retail sectors over the coming 24 months as businesses move to adopt new business models and new value propositions. Both CVS and Walmart have laid off staff to reset the company around health care. The Gap laid off thousands to rebuild as a digital only company. Whether these moves will prove to be the right decision remains to be seen, but we’re going to see many more sweeping changes in skill sets before the dust settles.

BenedictEnterprisesLLC
BenedictEnterprisesLLC
6 days ago

When you compare our healthcare system to that of other developed nations, it feels like a little disruption from that retail industry might be a good thing that drives costs down and service up.

However, within the healthcare retail space, this article focuses on the competition between two rivals in the space. We can’t be sure what aspect of competition caused CVS to reduce corporate headcount, and certainly, Amazon has had its share of layoffs recently. As such, the discussion question is hard to answer confidently until we know more about the “root cause” of this action.

Craig Sundstrom
Craig Sundstrom
6 days ago

The way the Daily Poll was phrased, methinks, has a lot to do with how people answered it. Describe it as “disruption” and many – namely those of us who still see “disruption” as a negative thing – will say ‘bad’; but phrase it as “Will the entry of CVS and Amazon into the medical industry…” and the needle oft swings to ‘good’.
Of course the phrasing is perhaps a reflection of how one views the motivations here: are they really interested in improving things, or just in it for a fast buck? My view of Amazon ?? I’m not a hater… nor lover, either.