CVS Health is shuttering 16 Oak Street Health Centers, or 7% of the total number of the senior-focused primary care locations the company operates across the U.S., the company disclosed Friday October 24, 2025
CVS Health and Oak Street Health
CVS Health is shuttering 16 Oak Street Health Centers, or 7% of the total number of the senior-focused primary care locations the company operates across the U.S.
Citing “elevated medical costs” as one major reason for the closures of the Oak Street facilities, CVS’ decision comes as Walgreens exits the primary care business and a decision last year by Walmart to shutter dozens of in-store clinics.
Healthcare has entered a period of rising medical costs, particularly from older adults insured by Medicare or private Medicare Advantage plans who are seeking healthcare services at a higher rate. That has forced health insurers to more closely monitor their expenses and, in turn, squeeze what they pay providers of medical care.
“We have a rate trend disconnect in the industry,” Dr. Sree Chaguturu, CVS Health executive vice president and president of health care delivery said in an interview. “It has created pressure on health plans, which creates downstream pressure on value-based care providers.”
But CVS remains committed to Oak Street, a company the owner of drugstores and the giant health insurer Aetna paid more than $10 billion for just two years ago. The Oak Street model is designed to help older adults stay healthy, improve their health outcomes and patient experience all while keeping costs in check.
CVS continues to invest in Oak Street and it has grown substantially since the acquisition, company executives said. “Value-based care continues to be very important in healthcare in this country (and) we believe Oak Street Health is a best in class model for primary care,” Chaguturu said.
When CVS bought Oak Street two years ago, the company employed about 600 primary care providers and had 169 medical centers across 21 states. CVS management at the time said Oak Street Health “will have more than 300 centers, each of which has the potential to contribute $7 million of Oak Street Health Adjusted EBITDA at maturity” by 2026.
Under new CVS chief executive officer David Joyner, who replaced Karen Lynch last year, the company has slowed the opening of the Oak Street Health centers. Following the closures, CVS will continue to operate 230 centers across 27 states.
CVS executives say the Oak Street centers are important and the company is still investing in Oak Street health centers through the strategy is more about “growth in existing centers” rather than opening new ones, Chaguturu said. “We are investing in Oak Street . . and investing in technology.”
Source: https://www.forbes.com/sites/brucejapsen/2025/10/24/cvs-to-close-16-oak-street-health-centers-amid-industry-cost-issues/
