UnitedHealth’s Subsidiary Optum to Shut Down its Ohio Plant & Telehealth Business

This development was revealed through a Worker Adjustment and Retraining Notification Act (WARN) filing published late Thursday last week. 

Optum, a subsidiary of UnitedHealth Group, is set to close its Toledo, Ohio plant, and telehealth business, Optum Virtual Care. 

The shut down of the Ohio Plant was revealed through a Worker Adjustment and Retraining Notification Act (WARN) filing published last week which resulted in the layoffs of 129 employees. 

Reportedly, the layoffs will occur in three phases from July 15 to September 6. 

Among the affected employees are associate business systems analysts, associate business operation coordinators, project managers, engineers, and system analysts. None of these workers are represented by a union.

Further, Optum has also confirmed the shutdown of its telehealth business, Optum Virtual Care. The decision was long speculated, especially after employees posted layoff notices on April 18. 

The closure was officially corroborated by Endpoints. A UnitedHealth Group spokesperson stated that the company continually reviews its capabilities and services to align with evolving needs.

"Virtual care has been, and will continue to be, a core part of our comprehensive, integrated care delivery model designed to provide care to people where, when, and how they prefer. As an enterprise, we are committed to providing patients with a robust network of providers for virtual urgent, primary, and specialty care options," the spokesperson stated. 

This move marks a significant shift from UnitedHealth's previous strategy, which saw a dramatic rise in telehealth appointments from 1.2 million to 34 million visits between 2019 and 2020. 

Dr Margaret-Mary Wilson, CMO at UnitedHealth Group, had previously described virtual care as transformative for population health and health equity initiatives. In 2022, Optum reported a 200% increase in telehealth appointments among Medicaid enrollees.

Series of Layoffs at Optum’s Subsidiaries

The shake-up extends to Optum's subsidiary, naviHealth, where CEO Harrison Frist announced his resignation. He will be succeeded by Heather Jarrett, UHG's senior VP of Government Clinical Programs, though Frist will remain in an advisory role temporarily. 

This transition occurs amid significant pressure on the company, including a class action lawsuit filed in November. The lawsuit claims that naviHealth's internal algorithm denied claims with a 90% error rate, impacting Medicare Advantage members' care.

Additionally, naviHealth recently laid off 114 employees, adding to the uncertainty within the company.

Optum's at-home medical care division, Landmark Health, is also undergoing layoffs across all states. Landmark, which had 2,534 employees in 2022, is said to have laid off upwards of 370 employees nationwide.

The layoff affected roles such as health service directors, senior operations managers, ambassadors, and care coordinators. These job cuts came unexpectedly for many employees, who had anticipated some reductions but not on this scale.

Recent regulations, such as the 2024 Medicare Physician Fee Schedule Final Rule, may have influenced Optum's decision to reduce its workforce at Landmark, given the reduction in provider visit reimbursements.

Wider Implications

Optum appears to be undergoing a significant workforce reduction, though the exact numbers remain unclear. Reports from anonymous sources and social media posts suggest that hundreds, if not thousands, of employees have been laid off. 

For example, an anonymous source claimed 400 employees were let go from Optum's California care division. Additionally, up to 500 employees may have been affected at Landmark Health.

The full extent of the layoffs is not yet confirmed, and Optum has not filed WARN Act notices in all states where layoffs are reported. According to a lawsuit reported by Becker's Payer in November, former employees have accused the company of violating mass layoff laws.

Affected workers can apply for other roles within the company, though internal reports suggest that the process is fraught with challenges. 

High staff turnover and the dismissal of some managers and upper leadership have delayed the internal application process, and equivalent positions may not be available in the same locations.