TriCare to Close Troubled Division : Health care: Firm will lay off 30 in Orange County in $6 million restructuring. Search for a new CEO is planned.
TriCare Inc., which operates a chain of clinics that evaluate injuries of workers hurt on the job, is closing a troubled part of its business, prompting 117 layoffs and a $6-million restructuring charge. About 30 jobs will be cut in Orange County.
The Irvine-based company also plans to recruit a new chief executive officer with “appropriate experience and skills.” Stephen F. Bulluck, TriCare’s current chief executive, will remain as chief operating officer.
TriCare’s shares fell by 50 cents on Friday to $1.875 in NASDAQ trading.
TriCare will abandon its troubled medical and legal evaluation business and focus on strengthening a string of industrial medical treatment clinics. Those clinics treat injured workers during the first 30 days after on-the-job accidents. The medical and legal evaluation business provides legal and medical advice for injured workers.
Friday’s announcement was the second time in recent months that TriCare has taken steps to address its problems. In December, TriCare laid off 50 employees in its medical and legal evaluation business. “This used to be our majority business, then it became a minority business, and now it’s gone,” said TriCare spokesman Lawrence Wasserman.
TriCare opted to end the operation “in light of the ongoing and increasing delinquency in insurance payments, continued political uncertainty and increasing regulatory requirements, which collectively result in escalating costs to provide such services,” Wasserman said.
Health care industry analysts supported TriCare’s decision to abandon the medical and legal evaluation operation. “The move is prudent from an investors’ angle,” said Paul Brown, an industry analyst with Volpe, Welty & Co., a San Francisco brokerage. “This is an operation that Wall Street has been ambivalent about.”
TriCare’s decision to focus on its industrial medical treatment clinics “means they’re focusing on their strength, the area that is fighting the least head winds,” Brown said.
