Aetna owner CVS Health to cut more than 500 jobs tied to CT
Hearst CT Media
Aug. 18, 2023 2:44 p.m.
CVS Health announced Friday that it would lay off approximately 520 employees who are based at or report to its offices in Hartford, as it moves forward with its plan to cut about 5,000 positions across the company — downsizing in one of the state’s most-important industries that is being anxiously watched by a number of public officials.
The layoffs will affect employees who are connected to CVS’ offices at 151 Farmington Ave., the home base for its health insurer, Aetna. Analysts, directors and managers across various departments account for many of the affected positions. Companywide, the job cuts primarily focus on corporate roles and equate to less than 2 percent of CVS’ U.S. workforce of more than 300,000 people.
“These terminations will affect employees who work (and may also reside) in Connecticut, and also includes a significant number of employees who are outstationed (‘remote’) employees who are not physically present in Connecticut but for work purposes report into a leader located in Connecticut,” the company said in a letter Friday, which was addressed to state Department of Labor Rapid Response Coordinator Susan Fracasso and Hartford Mayor Luke Bronin, and sent to comply with the federal Worker Adjustment and Retraining Notification Act (WARN).
“For WARN purposes, the remote employees only are treated as ‘assigned’ to the Connecticut location,” the company continued. “These remote workers have been aggregated with the local employee numbers, resulting in a layoff of more than 500 employees in the aggregate; however, only 306 positions that are being terminated are held by Connecticut residents.”
The layoffs are scheduled to start on Oct. 21.
In a separate written statement, CVS said it would then have approximately 9,000 employees in Connecticut.
Woonsocket, R.I.-based CVS, which ranked No. 6 in this year’s edition of the Fortune 500 list of the largest U.S. corporations, is in the midst of a significant transition, as it seeks to play a larger role in treating patients. In May, it completed the $10.6 billion acquisition of primary-care company Oak Street Health. In March, it completed the nearly $8 billion acquisition of Signify Health, which focuses on home health care.
“We took a very thoughtful and careful approach to this restructuring,” CVS CEO and President Karen Lynch said during an earnings call on Aug. 2. “We were very deliberate in making sure that we had non-customer facing roles and that we weren’t taking any action that would risk the execution of our long-term strategy.”
Amid the blow of several hundred employees losing their jobs, several public officials said that CVS was still committed to keeping Aetna’s headquarters in Hartford.
A few years ago, around the time that CVS announced its agreement to acquire Aetna for about $70 billion, plans surfaced for an Aetna headquarters in Manhattan. But such a relocation had been abandoned by early 2018.
“The state has engaged with CVS top executives who have reaffirmed their commitment to Hartford as Aetna’s headquarters, upholding the city’s status as the insurance capital,” the Insurance Department said in a statement Friday.
Bronin said that he had received the same commitment from the company.
“Hartford and the Hartford region remain one of the largest and most robust centers of the insurance industry,” Bronin said in a statement Thursday. “And we have been assured that Aetna/CVS will continue to maintain the Farmington Avenue campus as the Aetna headquarters.”
Bronin added that, “I’m just thinking of all the families affected by these layoffs here in Connecticut, and I hope that many of those impacted will be able to quickly find new positions in our insurance industry here in Hartford.”
Despite the layoffs at Aetna, Connecticut will remain one of the largest insurance hubs — anchored by Hartford, which is known as the “insurance capital of the world. The state ranked No. 1 nationally in insurance carrier employment as a percentage of total employment, at 3.7 percent, with more than 60,000 insurance carrier and “related full-time” employees, according to a report published last year by professional services firm PwC and Connecticut Insurance and Financial Services, a statewide initiative of the MetroHartford Alliance. The state also ranked No. 1 in the country in insurance payroll as a percentage of total payroll, at 6.5 percent.
“This is a phenomenal place for insurance companies to grow because of the talent that we have here,” state Rep. Kerry Wood, D-Rocky Hill, the House chairwoman of the Insurance and Real Estate Committee, said in an interview Thursday. “I’m going to continue to push forward with any policy efforts that I can in that space. There’s always more to do.”
In contrast, some elected officials have taken a more critical tone in their assessment of the layoffs.
In a letter Wednesday to the commissioners of the state departments of labor, insurance, and economic and community development, state Sen. Tony Hwang, R-Fairfield, said that he was troubled by CVS’ “lack of transparency” because the company had not disclosed at that point the number of layoffs in Connecticut.
Hwang also included several pointed questions in the letter.
“In order to get its takeover of Aetna approved in 2018, CVS promised to maintain 5,291 jobs at Aetna in Connecticut for at least four years. Does it concern you that these layoffs are coming so soon after that agreement expired?” he asked. “Have you held meetings to discuss this with CVS?”
In addition, Hwang asked the commissioners whether, in light of the layoffs, they were concerned that Aetna was seeking a 10.9 percent increase in 2024 for plans that provide medical and prescription drug coverage for employers with 50 or fewer workers.
(CID will hold a public informational meeting Monday on Aetna’s and several other health insurers’ proposed rate increases, and Hwang said that he planned to testify against the rate hikes.)
Several members of Connecticut’s Congressional delegation, including Sens. Richard Blumenthal and Chris Murphy, and Rep. John Larson, whose district includes Hartford, have also voiced their concerns.
“The layoffs announced today at CVS are more evidence that the recent massive consolidations in the healthcare industry are bad for both workers and consumers. We don’t yet know how these layoffs will affect Aetna’s headquarters in Hartford, but my office will be ready to help make sure those who are impacted land on their feet,” Murphy, who is a member of the Senate Committee on Health, Education, Labor and Pensions, said in a statement on Aug. 1. “Over and over again, we see health care mergers ultimately lead to significant job loss, higher costs for patients or worse quality of care. It’s past time we take a closer look at who really benefits from these deals.”
https://www.ctinsider.com/business/article/aetna-cvs-health-cut-500-jobs-ct-18301057.php
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