Thread regarding CVS layoffs

A lot of the headwinds have been known for a long time (STARS ratings, Centene, COVID “bump” ending). These layoffs have been in discussion since the beginning of the year. Lists started being made as far back as March/April with more names added earlier this summer to meet increased demands from the C-suite to meet certain numbers.

I think things like Blue Shield of California surprised a lot of these mo--ns who think we’re too important to be replaced by some startup. Arrogant leadership, of which Woonsocket is full of these days, is not a good thing.

It's actually not very likely there will be a lot of support for whole-cloth disavowing of health insurance anytime soon. This is because the political conservatives and a lot of the public still see value in their insurance coverage. Lobbyists will fight tooth and nail, along with senators, to keep it privatizatized where they can. It would take a mammoth education campaign to sway citizens to recognizing the benefits. With Medicare already bloating the government balance sheet, politicians will be hard pressed to change things quickly. I think it would be more than a decade before you could see any significant movement toward universal payor. Did you see all the backlash about lowering the age for Medicare? Imagine that x1000.

Consider that health insurance is deeply integrated with employment, and I can't even fathom all of the weeds regarding transitioning health insurance sponsorship from the employer to the government. Most Americans get their coverage through work as a benefit. Would the plan be for employers to divert sponsorship funds from private insurance to the government. I don't see how that would easily work. Now, employers can shop around between insurance companies. With single payor, it's likely some development of a scheme to determine what amounts each employer has to pay into the system.

I think this is beginning of the end of health insurance. I think within 2 years we are at universal healthcare and government control. CVS will be a health care company then.

Remember, this business operates on the thin margins. Stock analysis tells us the margins operate in the 2-3% range. That's not a lot of wiggle room. Even though equates to millions of dollars, it means there's always cost pressure when significant changes occur whether it be legislatively or business related. CVS side is basically revenue by fulfillment, and the insurance is revenue by plan design.

When you think about companies that actually make something, they can preserve margins if the product they're selling demonstrate value or demand. Consider Tesla, they can maintain gross margins per vehicle in the 17-20% range. That's a healthy margin. The way they can increase margins further is by lowering build cost.

CVS can't really lower the provider cost without alienating providers, so by getting into the primary care business -- they can control more and not rely on thin margins exclusively.

The company is always calculating forward-looking revenue and must take actual and potential losses into account contemporaneously. So it's likely they had/ have reason to believe that based on PBM hits that pressure on future profits would mean further pivot would be necessary, especially if data is telling them profits are going to decrease in a business segment. It just lends further support to their restructuring plan, which apparently included the layoffs.

However, they may have to revisit and make further cuts if necessary should new data come. Like one poster mentioned, we are at the mercy of these decisions. The idea of a corporation is that smarter people know when to make the right decision, but they also have to know how to get the right people in the room to help arrive at the best solution.

Shakier.