Omnicare's bankruptcy follows years of costly settlements and a nearly $1 billion judgment, capping a troubled long-term care pharmacy investment.
CVS Health’s long-term care pharmacy arm, Omnicare, has filed for Chapter 11 bankruptcy protection following a nearly $1 billion legal judgment, putting the subsidiary and its connection with its parent company in jeopardy.
The filing in the U.S. Bankruptcy Court for the Northern District of Texas comes after a federal judge in July ordered Omnicare to pay $948.8 million in penalties and damages. The case stemmed from a whistleblower lawsuit alleging that the company improperly billed Medicare, Medicaid, and TRICARE by dispensing drugs without valid prescriptions or refills from 2010 to 2018. While CVS has argued the violations did not harm patients, the ruling created a significant liability for the business.
CVS acquired Omnicare in 2015 for $10.4 billion in cash plus $2.3 billion in debt, betting on long-term care as an important growth segment. However, the deal has been plagued with challenges, including integration hurdles and scrutiny over billing practices.
By isolating Omnicare’s liabilities in bankruptcy, CVS is attempting to contain the fallout and prevent broader impact on its core operations.
In announcing the filing, Omnicare stated that its pharmacy and clinical services will continue uninterrupted during the reorganization. The company secured $110 million in debtor-in-possession financing, subject to court approval, to support operations alongside ongoing cash flow. It also committed to maintaining wages and benefits for employees and paying vendors for obligations incurred after the bankruptcy filing.
Omnicare noted it may pursue a standalone restructuring or a sale of the business.
“The Company also intends to use this process to address other financial challenges facing the broader long-term care pharmacy industry and to evaluate its restructuring options, including the implementation of a standalone restructuring or sale strategy,” David Azzolina, president of Omnicare, said in a statement.
CVS had already previously explored a divestiture, when it sought to sell the organization in 2022 before putting its efforts on pause the following year.
The company has faced a string of legal battles and regulatory scrutiny before and after its acquisition.
In 2012, Omnicare paid nearly $50 million to settle allegations that it accepted kickbacks from pharmaceutical manufacturers in exchange for promoting certain drugs to nursing home patients. In 2014, it agreed to a $124 million settlement over claims it provided improper financial incentives to nursing homes to secure business.
In 2016, Omnicare agreed to a $28 million settlement to resolve allegations that it solicited or received kickbacks from nursing facilities. One year later, it agreed to pay $8 million to settle claims tied to improper billing of Medicare and Medicaid.
The Department of Justice then joined the whistleblower civil lawsuit in 2019, putting more pressure on CVS’ ability to keep Omnicare afloat.
Now, Omnicare’s liabilities have outweighed its strategic value to CVS, prompting the bankruptcy decision.
By taking advantage of opportunities for meaningful transformation, rural hospitals can not only survive, but thrive in the face of grueling challenges.
Even amid widespread headlines about closures and financial atrophy, Sanford Health president and CEO Bill Gassen is confident in where rural healthcare is heading.
Whether his belief is steadfast or he's simply leading from the front as both the head of the country’s largest rural health system and the new chair-elect designate for the AHA, Gassen’s positive outlook is particularly notable during a time when policy changes and economic turbulence are threatening the viability of rural providers.
“I am more bullish about the future of healthcare than I’ve ever been before,” Gassen told HealthLeaders. “Despite a lot of headwinds, a number of different challenges that we’re facing, I believe that we have a lot of reasons to be optimistic, specifically as it relates to rural healthcare.”
That optimism, Gassen highlighted, comes from rural healthcare finally being part of the national dialogue in a way it hasn’t been historically.
“As we continue to bring more individuals and organizations to the table to start those conversations, we stand a much better chance of creating long-term solutions that actually help solve for the issues that we’re facing in rural healthcare, as opposed to getting around and just complaining about them,” he said.
For rural providers, from large systems like the South Dakota-based nonprofit helmed by Gassen to small independent hospitals, the strategy for sustainability must be as much about advocacy as it is operations.
With federal and state policies in flux, Gassen pointed to several areas that demand urgent attention to keep care accessible and affordable in rural America, such as 340B protections, telehealth flexibilities, and the extension of enhanced premium tax credits.
Sanford is also closely tracking the rollout of the Rural Health Transformation Program, a federal initiative to help stabilize struggling rural providers that launched earlier this month. With states now in the application phase, Gassen said systems like his have a narrow window to influence how funds are directed and applied.
Pictured: Bill Gassen, president and CEO, Sanford Health.
Transforming care delivery
From Gassen’s perspective, while the mission of healthcare will always be consistent, the delivery model cannot remain static.
“Broadly, as it relates to healthcare, whether we’re thinking about it from a rural perspective or more densely populated urban communities, what we do can never change. How we do it has to change,” he said.
That change is being driven by technology. Sanford now offers 78 specialties and subspecialties through its virtual care platform, helping patients access services closer to home.
In behavioral health—a pain point in 70% of rural counties that lack a psychiatrist—Sanford is embedding specialists in primary care clinics.
“One size does not always fit all, but we do believe that if we really discipline ourselves, that when it comes to technological investments, when it comes to decisions around devices, decisions around certain ways in which we would configure our electronic medical record, there's ways to drive efficiencies that create greater capacity to be able to invest more into these communities,” Gassen said. “That is very important when you look at how do you move this into the future.”
Solving for a rural workforce
Sanford is tackling workforce shortages head-on by expanding training opportunities and creating flexible staffing models. By 2027, the system will operate 40 graduate medical education programs, with more than 40% of trainees staying on to practice within the system, Gassen noted.
“We know that by having these programs be invested in and endowing these programs, that's going to create the opportunity to continue to expose our clinicians and our physicians of the future to what it's like to provide care in rural America, to think differently about how you do it, and to fall in love with these communities,” Gassen said.
Sanford is also leaning into pathway programs that start as early as high school, and its internal staffing agency, Solutions by Sanford, to give clinicians flexible career options while keeping them within the system.
Beyond care delivery, Sanford is using technology to address clinician burnout. One standout implementation has been ambient listening, which automates clinical documentation.
“Our physicians and clinicians who have an opportunity to use that across the board, without exception, have given that rave reviews,” Gassen said. “They’ve talked about how it’s brought joy back to the workplace for them, that it’s provided a much better opportunity and experience for their patients.”
Between building a sustainable workforce and balancing care access with financial health, rural hospital CEOs undoubtedly have their work cut out to guide their organizations to success. But through his leadership at Sanford, and especially in his new position at the AHA, Gassen said he intends to bring his solution-oriented, rural-informed optimism to the national stage.
“I really do think that in front of us, we have incredible opportunities,” he said. “When [hospitals] have difficult situations and uncertainty like we’ve talked about here, I think that creates an incredible crucible for us to be able to bring together solutions and to be able to think differently about how we solve for these into the future.”
The reduction follows a trend of hospitals nationwide cutting jobs, freezing hiring, and reorganizing operations to ease financial challenges.
Memorial Sloan Kettering (MSK) Cancer Center is eliminating less than 2% of its workforce, joining a growing list of health systems making difficult staffing decisions in response to ongoing financial and operational pressures.
The New York-based cancer center said the job cuts were due to the need to reallocate resources and close a budget gap of more than $200 million, according to an email sent to employees. While the organization did not specify the exact number of roles affected, the reduction represents a notable contraction for one of the nation’s leading specialty hospitals, which employed 21,175 staff as of last year.
Employees impact by the terminations will be notified between late September and November 15.
“Structural deficits are an industry-wide issue affecting hospitals and healthcare organizations across the country,” MSK said in a statement. “To close the gap and enable MSK to continue delivering world-class cancer care, department leaders have identified a variety of efficiencies and cost savings. These include reducing spending through program redesigns, decreasing work with consultants, and identifying a limited number of currently staffed positions — less than 2% of MSK’s workforce — that will be eliminated as work is reorganized and reprioritized.”
MSK’s move reflects a broader trend across the healthcare sector. In recent months, hospitals and health systems nationwide have announced layoffs or hiring freezes as they confront rising expenses and margin volatility. Leaders are balancing the imperative to maintain access and quality of care with the reality of unsustainable operating strain.
Workforce retrenchment hasn’t been limited to any one segment. Academic medical centers, community hospitals, and even large integrated systems have all taken steps to reduce staff in non-clinical and administrative areas, while being careful to preserve frontline clinical capacity. Some executives have framed these actions as necessary adjustments to stabilize finances and position organizations for long-term sustainability.
Providence, one of the nation’s largest nonprofit systems, has taken several steps this year to reduce its workforce, including cutting 128 jobs in Oregon, restructuring to eliminate about 600 positions, and pausing nonclinical hiring. UVM Health Network recently announced 146 job cuts, primarily in finance, IT, human resources, and communications. MetroHealth System in Cleveland is eliminating about 125 nonclinical roles while freezing most nonclinical hiring, and Children’s National Hospital in Washington, D.C., has slashed 70 administrative positions.
At Memorial Sloan Kettering, the job cuts highlight the challenges facing even specialized providers with strong reputations and national reach. While demand for oncology care continues to rise, the costs associated with highly complex treatment, coupled with broader inflationary headwinds, have left little room for inefficiencies.
Although healthcare has been a major driver of national job growth, the sector slowed in August, according to the latest data from the Bureau of Labor Statistics. The industry added 31,000 positions, which was well below its 12-month average of 42,000 jobs created.
Hospitals contributed 9,000 of those jobs, representing a sharp decline from the 16,000 added in July.
Hospitals and health systems should remove barriers for learning so future talent can develop and seamlessly integrate into the workforce, says this COO.
In this episode of HL Shorts, Sharla Baenen, COO of Emplify Health, Bellin region, shares how healthcare academies, apprenticeships, and nurse tech programs create a pipeline from school to bedside for the next generation of healthcare workers.
Financial challenges are adding up for hospitals to create “future uncertainty,” Kaufman Hall’s latest analysis found.
Hospital margins lost momentum in July, with profitability sliding despite steady revenue growth, according to Kaufman Hall’s latest National Hospital Flash Report.
Expenses continue to rise, while increasing bad debt and charity care are placing adding strain on organizations’ bottom lines, highlighting the fragile nature of the financial recovery hospitals have been working toward.
The average monthly operating margin for hospitals in July was 2.6%, inclusive of all allocations for the cost of shared services that they receive from their health system. That figure was down from 3.4% recorded in June, which was the highest mark since December.
Kaufman Hall’s median calendar year-to-date operating margin dropped to 1.7% with health system allocations, compared to 1.9% in June. Though the current margin is at its lowest point for 2025, it remains above the average of 1.4% for 2024.
The decline in profitability hasn’t stemmed from weak revenue, which continues to grow. In July, net operating revenue per calendar day was flat from June but up 8% year over year. Inpatient and outpatient revenue per calendar day rose 2% and 3% month over month, and 7% and 12% year over year, respectively.
In terms of volume, discharges per calendar day went up 1% on a month to month basis and 4% year over year. Adjusted discharges per calendar day improved by 2% from June and by 6% over the same period last year. However, average length of stay declined by 1% month over month and by 3% year over year.
One of the major areas where hospitals are feeling financial pressure is bad debt and charity care, which fell by 1% on a per calendar day basis compared to June, but remained 9% higher than July 2024.
Meanwhile, on a per calendar day basis, total expenses (7%), labor expenses (5%), non-labor expenses (9%), supply expenses (12%), drug expenses (12%), and purchases service expenses (7%) were all up year over year.
“While performance has generally been strong this year, profitability has decreased slightly over the past few months,” Erik Swanson, senior vice president of data and analytics at Kaufman Hall, said in a statement. “Bad debt and charity care also continue to rise. In addition, operating margins for health systems are about 1% lower than hospital margins. This points to potential challenges for hospitals and health systems to weather future uncertainty.”
Hospital leaders must engage directly with AI to set the tone with their workforce and gain more familiarity for the solutions they hail.
CEOs across all industries increasingly view AI as essential to their organizations’ future, but without hands-on experience, leaders risk missing out on how it translates into daily workflows.
Though executives often tout AI as transformative, many have been slow to integrate the tools into their personal routines, according to a recent report by The New York Times. Now, CEOs are pushing themselves and their senior teams to get comfortable with the technology, highlighting a shift that carries lessons for hospital decision-makers.
The underlying challenge is that senior executives are often removed from the daily, hands-on work where AI makes the most immediate impact. While younger employees have grown up applying tools to spreadsheets, presentations, and design, leaders spend most of their time in meetings and approvals. As a result, exposure and experimentation must be intentionally built into executive routines.
Hospital leaders face the same dynamic. AI is advancing quickly in areas such as the workforce and supply chain, but executives who avoid direct engagement may struggle to evaluate its real-world impact. Without firsthand experience, they risk overlooking challenges with AI like flawed data inputs and workflow disruptions, while failing to set an example for their staff.
According to research and advisory firm Gartner, 77% of CEOs view AI as transformative, yet only 44% believe their technology officers are fully equipped to navigate the landscape.
To get their senior teams more engaged, CEOs who have already embraced AI are utilizing creative strategies, according to the Times. Some are instructing leaders to use tools like Google’s Gemini before turning to its traditional search, while others are dedicating time at corporate retreats for executives to experiment with generative AI platforms. These approaches are designed to build familiarity and reduce the hesitation many high-level managers feel toward adopting new technology.
At the same time, CEOs need to solidify their understanding of their organization’s processes to drive improvement through solutions like AI, Fairview Health Services president and CEO James Hereford recently shared with HealthLeaders.
“We're in this golden era and I don't know that we fully realize the impact that AI is going to have in large language models and all the things that we will undoubtedly see in the next three to five years,” Hereford said. “You cannot take full advantage of that if you don't have that level of operational discipline and knowledge to know how this tool, this capability, this new thing can completely transform and change the way that we think about that process. Too often in our history, we've just put more technology on top of bad process and that hasn't worked out so well.”
For hospitals, adoption and acceptance of AI across the workforce is more likely if CEOs and senior teams demonstrate a willingness to learn and tinker with tools.
As providers explore how AI can improve patient care and operations, the path forward begins with active executive participation. Staying hands-off is no longer an option.
CMS data reveals patient complaints against hospitals are rising sharply, illustrating oversight gaps and trust issues that demand CEO attention.
Hospital leaders face a growing concern when it comes to the patient experience: Complaints are on the rise, and federal data show the problem is only intensifying.
According to the latest State Performance Standards System report from CMS, complaints against hospitals have surged by 79% over the past five years and topped 14,500 in fiscal year 2024. That increase is straining the oversight system designed to ensure hospital quality and safety, while also revealing frustrations from patients about their care experiences.
The report highlights how oversight gaps are contributing to dissatisfaction. State Survey Agencies, which investigate patient complaints and conduct recertification surveys, have had the same funding since 2015, even as their workload and use of resources has gone up.
As a result, many investigations are not launched within required timeframes. Regular recertification surveys are also lagging, leaving hospitals without timely accountability checks.
For patients, that can translate to delays in care, safety lapses that go unaddressed, and the sense that their concerns are not being taken seriously. When investigations drag or oversight feels absent, patients increasingly turn to filing formal complaints to voice their displeasure.
How CEOs can respond
For hospital leaders, the CMS findings are a reminder that patient complaints are a risk to both compliance and culture. They point to gaps in how effectively organizations listen and respond to what patients are telling them.
Patients who perceive slow responses to their safety or quality concerns often conclude that hospitals are indifferent to their needs. In today’s environment, where patient experience weighs as heavily as clinical outcomes in shaping provider reputation, that perception carries real consequences.
Particularly in the wake of the COVID-19 pandemic, it’s incumbent on providers to repair trust with patients and the public that has eroded over time.
Hospital CEOs can’t control federal funding for state surveyors, but they can control how their organizations treat patient complaints. Beyond ensuring timely reporting and compliance, leaders should view complaints as critical feedback and warnings of issues that have the potential to damage patient trust and quality scores if left unresolved.
Investing in rapid-response systems, empowering frontline staff to resolve concerns in real time, and strengthening patient communication can help reduce the need for patients to escalate to formal complaints.
The surge in complaints reflected in CMS’ report underscores that patients are increasingly dissatisfied and choosing to speak up. For hospital leaders, the question is whether they’re truly listening and willing to act.
Executives share strategies for educating and developing healthcare workers at the HealthLeaders Workforce NOW Summit.
As healthcare’s workforce crisis continues to evolve, hospital leaders recognize that the long game requires building talent pathways at every stage, from early education levels to medical staff leadership.
At the HealthLeadersWorkforce NOW Summit, hospital executives from across the country shared strategies to address staffing shortages by creating pipelines that ensure long-term sustainability.
Here are three ways these leaders are developing talent to build the workforce of the future.
Reaching talent early
For each of the panelists, workforce development starts years before candidates graduate from nursing school.
Essex described how Baylor Scott & White is making investments at the middle and high school levels to capture interest in healthcare careers early.
“One of the strategies that we've really been pushing is our ability to develop more formal partnerships with post-secondary education institutions and try to be able to get to the talent base as early as possible,” Essex said.
Baenen outlined a structured pathway that gives students multiple entry points into the industry. Through healthcare academies, youth apprenticeships, and student nurse technician programs, Emplify Health creates a seamless journey from the classroom to the bedside.
“By the time they're graduating from nursing school, you've already done most of their orientation, which is amazing,” Baenen said. “So that's a huge time saver and cost saver.”
For rural communities, where recruiting from outside markets is especially difficult, Henley stressed that exposure is key. She highlighted that her organization invites students into hospitals for tours and hands-on learning, which goes a long way to creating a lasting connection.
“We do tours where we get them excited not just about the nursing aspect, but in the lab, in the office,” Henley said. “Once they're comfortable inside our doors, it feels like home to them.”
Leveraging education partnerships
Partnerships with academic institutions have become a cornerstone of workforce strategy, giving hospitals both a stronger pipeline and a role in shaping curricula.
Baylor Scott & White is one of 10 healthcare organizations working with Bloomberg Philanthropies to develop an education program for schools across the country, according to Essex. He noted that the effort is already paying dividends in Dallas, where students at Uplift Education are being introduced to healthcare careers and prepared to pursue additional training.
Emplify Health has taken a similar approach at the university level, funding education for licensed clinical social workers through a philanthropic gift and providing clinical placements.
“If we can remove barriers for learning and help students with clinical placement and licensure, it’s a huge benefit for us to maximize workforce opportunities,” Baenen said.
Henley shared that smaller systems can also play an outsized role in supporting vocational programs. When a local school needed space, Java Medical Group opened its doors so students could continue learning on site. That type of collaboration, she said, not only builds talent pipelines but also strengthens ties with the community.
Developing future clinician leaders
Talent development doesn’t stop at recruitment. All three executives underscored the importance of preparing physicians and clinicians to step into leadership roles to strengthen engagement and align on decision-making.
Baenen described how Emplify Health relies on physician dyad partnerships to ensure clinical leaders are equal partners in strategic and operational decisions.
“Within our structure, we have service line leadership and an administrative leader paired with a physician dyad partner,” she said. “That is key and is truly their partner to work together on opportunities related to recruitment, workforce, and the day-to-day operational challenges.”
Henley said transparency is critical for keeping physicians engaged and committed, especially in resource-constrained rural hospitals.
“From the very beginning we bring them in, show them the books, show them the numbers, show them what they’re working with, and it becomes a partnership,” she said.
At Baylor Scott & White, Essex pointed to a collaboration with Southern Methodist University that provides physicians with business and leadership training, equipping them for greater responsibilities in governance and operations.
“We’ve had a leadership development course for physicians that helps intersect business and medicine,” Essex said. “We had one physician recently that even shared that by going through that course, they thought it was possibly even more valuable than a whole semester of an MBA program.”
When combined, these strategies allow hospitals and health systems to go beyond simple recruitment to not only solidify today’s workforce, but build the workforce of tomorrow as well.
Are you a CEO or COO interested in attending our event and strategizing with other attendees? To inquire about attending the HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com.
The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at our LinkedIn page.
Hospital leaders have little choice but to pursue strategies for long-term workforce resilience in a shifting labor landscape.
Workforce pressures continue to be one of the most persistent challenges for hospitals and health systems. From staffing shortages to clinician unrest, leaders are grappling with the financial and operational ramifications of an evolving labor market.
To set their organizations up for success, decision-makers must take actionable steps that prioritize development, engagement, technology, and partnerships.
As healthcare workforce demands intensify, taking a proactive approach is essential for providers wanting to achieve long-term stability and sustainability.
The road ahead
While hospitals dealt with a unique set of staffing challenges during and in the aftermath of the COVID-19 pandemic, those headaches aren’t exactly in the rearview mirror.
By 2028, healthcare is projected to have a shortage of over 100,000 critical workers nationwide, according to a report by Mercer. Driving the deficit of workers is an aging population and a loss of clinicians due to factors like compensation and work-life balance.
Educating, training, and motivating future talent is essential, but it also requires an understanding of generational differences. As millennials and Gen Z make up more of the workforce, hospital leaders must familiarize themselves with what it is that younger workers want out of their job experience and be ready to deliver on that.
Longstanding practices that may have become the norm should give way to flexibility and a willingness to adapt, allowing organizations to innovate staffing models in a meaningful way.
Shaping the workforce starts NOW
Leaders must think beyond immediate staffing fixes and embrace long-term strategies that fortify pipelines, foster alignment, and utilize technology.
That’s the focus of HealthLeaders’ Workforce NOW Summit, Building a Unified Workforce: Technology, Physician Alignment, and Partnerships. This webinar will examine how provider organizations are tackling workforce gaps with scalable models and collaborative approaches designed to serve both today’s needs and tomorrow’s demands.
Attendees will hear firsthand how hospital leaders are expanding the nursing pipeline while addressing urgent shortages in critical support roles, aligning physicians and care teams to enhance collaboration and reduce burnout, and leveraging technology and partnerships to unlock new efficiencies and retention strategies.
With labor markets across industries in constant flux, building a resilient and unified workforce in healthcare is essential to delivering quality care. This session will offer insights from leaders on the frontlines of workforce transformation.
Jay Asser, event moderator and HealthLeaders CEO editor
This isn't just another webinar—it's your chance to learn from the best in the business and walk away with strategies you can implement immediately.
Join us as we take an all-encompassing approach to strengthening the workforce and building a sustainable pipeline for the future.
Register here to reserve your spot and see what other events we have coming up.
Are you a CEO or COO interested in attending our event and strategizing with other attendees? To inquire about attending the HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com.
The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at our LinkedIn page.
