Blue Cross Trims an Additional 161 Jobs From Payroll : Latest Round of Layoffs Is Centered in Oakland

Continuing what it described as “a major reorganization,” Blue Cross of California lopped another 161 employees off its payroll Friday following an earlier layoff of 120 that was effective last Monday.

The latest round of layoffs was centered in Oakland, which until this year served as headquarters of what is--with 3.5 million customers--the state’s largest health insurer. The first cut, announced last month, fell heaviest in Woodland Hills, which became the headquarters after Leonard D. Schaeffer became president and chief executive last February, succeeding Daniel L. Smith, who retired.

Schaeffer came to Blue Cross from Group Health Inc. in Minnesota, where he also was president. After taking charge in California, he brought in the consulting firm of Touche Ross & Co. to evaluate Blue Cross’ structure and help map the reorganization.

“We are building a new organization” under Schaeffer’s direction, spokesman Sharrell Blakeley explained. “In order to retain our competitive edge, we must move from a functional organization to one that is market driven.”

Of the 161 layoffs, 114 were in the Oakland office, and the rest in Woodland Hills. More than half of Blue Cross’ 5,300 workers now are located in Southern California, compared to fewer than 2,200 in the north, she added.

Blue Cross of California has suffered a number of shocks since Blue Cross of Northern California and Blue Cross of Southern California merged in June, 1982, at a time when health costs were rising sharply. After several years of red ink, Blue Cross’ financial health returned in 1984.

Blue Cross of California has been the target of consumer complaints recently over tardy claim reimbursements and generally slow service, which has prompted state insurance regulators to press hard for improvements. “We’re seeing signs of substantial progress at this point, but it’s still too early to give them a clean bill of health,” Everett Brookhart, chief of the Department of Insurance’s consumer affairs division, said last month.

Ironically, in view of that pressure, the bulk of the layoffs announced Friday are in the nonprofit company’s systems and data-processing departments.