Dive Brief:
- Centene is laying off 2,000 employees — a little over 3% of its workforce — as the health insurer struggles with headwinds from Medicaid redeterminations and Medicare Advantage star ratings.
- The layoffs were confirmed to Healthcare Dive by a company spokesperson. Centene has recently sold off assets, including AI platform Apixio and UK unit Circle Health Group, to refocus on its core business.
- Centene is the latest payer to undergo layoffs this year. In August, CVS announced it would lay off 5,000 employees, or 2% of its workforce, amid cost pressures integrating recent multi-billion-dollar acquisitions.
Dive Insight:
Health insurers brought in record profits during the pandemic as individuals delayed non-essential medical services, but some have stumbled this year amid pressures like normalizing utilization, regulatory changes in MA and states resuming Medicaid eligibility checks.
Payers with a heavy government presence like Centene and Molina are particularly exposed to headwinds in Medicare and Medicaid.
Centene, which contracts with 31 states to offer Medicaid coverage, is the largest Medicaid managed care organization in the U.S. Earlier this year, the payer lowered its 2024 earnings guidance due to expectations that Medicaid redeterminations will increase spending and lower premium revenue next year.
States could begin removing Medicaid beneficiaries from their rolls as early as April after resuming eligibility checks for the safety-net health insurance program.
Centene lost 262,700 Medicaid members from redeterminations in the second quarter, dropping its total Medicaid lives to just over 16 million.
Research firm Wolfe Research downgraded Centene in July, citing the impact of redeterminations along with concerns about the payer’s ability to improve its Medicare Advantage star ratings. Morgan Stanley also downgraded Centene in August, expressing similar concerns.
Centene is one of several payers that saw their star ratings, a measure of plan quality and member satisfaction that results in bonuses, fall for 2023, pressuring earnings targets. The St. Louis-based payer has taken a number of steps to improve its stars, including investing in provider enablement and focusing more on medically complex members, which management has said should help.
The CMS will release 2024 star ratings in October.
Health insurers aren’t the only healthcare companies that have turned to layoffs to cut costs in a difficult operating environment. Nonprofit hospital giant CommonSpirit laid off an undisclosed number of employees during its third quarter and 2,000 additional positions in its fourth. Walgreens laid off 10% of its corporate workforce in May.
Physician enablement company Clover Health and doctor networking platform Doximity both laid off 10% of their employees earlier this year, while primary care chain Cano Health let 700 employees go over the summer.
Other companies that underwent layoffs this year include Oracle-owned EHR vendor Cerner, telehealth provider Teladoc, Google’s life sciences sister company Verily and testmaker Abbott.
