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By M. PAUL JACKSON [email protected]
Friday, November 10, 2000 Page: 1A
WILKES-BARRE – Blue Cross of Northeastern Pennsylvania is eliminating about
60 positions as the region’s largest health insurance company looks to recoup
losses from its failed seniors managed-care program.
The job cutbacks – mostly occurring Thursday and today and coming almost
two months earlier than expected – will save the company about $13 million in
operating costs, officials said.
“It’s a difficult time,” said Blue Cross spokeswoman Connie Jewett.
“People are somber. It’s a quiet day.”
The 60 positions mostly come from First Priority 65, the company’s
managed-care plan for seniors.
The plan, which served about 31,000, lost about $14 million annually. In
June, Blue Cross officials announced they would discontinue the program at the
end of the year. Overall, about 300 positions have been affected, said
spokesman Gerry Snyder. About 170 positions in First Priority 65 are being cut
through attrition and retirements. The remaining 130 positions will be
eliminated through layoffs.
More than half of those layoffs – about 70 – took effect in June.
“We knew that, because the product was going away, the (employee) services
wouldn’t be needed,” Snyder said.
In February, Blue Cross laid off 53 workers and cut 46 jobs from its
traditional insurance side of the company. Blue Cross has laid off about 180
employees since the beginning of the year.
No additional layoffs are planned, but the company will “monitor very
carefully” its expenses and revenues, Jewett said.
To further reduce expenses, the local Blue Cross will implement
“broad-based” budget cuts, including some technology changes, Jewett said.
The job losses come weeks sooner than expected. Jewett said the company put
the layoffs into effect to alleviate workers’ fears.
“Employees were extraordinarily concerned about what their status was,”
she said. “As son as all the logistics came together we shared it with
them.”
All affected employees were given severance packages that take effect at
different times, Snyder said. A few critical employees will be asked to stay
on until the end of the year to complete outstanding insurance claims, he
said.
Blue Cross reported losses of about $42 million for First Priority, its
managed-care plan, in 1999.
The senior program brought in about $220 million in revenues in 1999 but
paid out about $234 million in medical claims for the same year, he said. This
year’s claims are expected to top about $240 million.
Officials have blamed the losses on inadequate reimbursements from Medicare
and expensive government regulations. As a managed-care plan, First Priority
receives much of its revenue from Medicare.
“We did everything in our power to find a way to avoid this outcome,”
Blue Cross President and Chief Executive Officer Denise Cesare said in a
prepared statement. “We feel absolutely terrible for the senior citizens and
Blue Cross staff members who are being affected.”
The news hit a number of Blue Cross employees hard. After exiting the
corporate offices Thursday, a few employees hugged each other and cried.
“A lot of people were let go today,” said a former employee, who declined
to give her name. “It’s just very sad for (management) to have to approach
them like this.”
M. Paul Jackson, a staff writer, may be reached at 829-7134.