HEALTH CARE : Medical Supplier Baxter Plans Restructuring, 4,500 Job Cuts

Hospital supplier Baxter International Inc. on Tuesday announced a $925-million prescription for its economic and legal ills that will include eliminating 4,500 jobs over five years.

The company said it will take a $700-million charge in the fourth quarter for costs associated with a massive restructuring, and will set aside $225 million against potential liability for ruptured silicone breast implants and HIV-tainted blood-clotting products.

Those moves will result in a loss for the fourth quarter and the full year, although Baxter expects substantial savings beginning in 1994.

Under the restructuring plan, the world’s largest hospital supplier said, it will sell its $675-million diagnostic products manufacturing business and reorganize its management structure, sales force and distribution operations.

Baxter also said it will invest nearly $2 billion in its fast-growing and profitable medical technology businesses.

The plan is intended to cut costs, boost sales and bolster Baxter’s stock price, which has been near a three-year low since early September. In trading Tuesday on the New York Stock Exchange, Baxter rose 12.5 cents to $24.25--indicating little support on Wall Street for the cost-cutting measures.

“The actions we are announcing today, while difficult, represent a continuation of our long-term objective to be globally oriented, responsive and flexible,” Vernon R. Loucks Jr., Baxter chairman and chief executive, said in a statement from Baxter’s headquarters in the Chicago suburb of Deerfield.

He said Baxter’s goal is “annual earnings growth in the high single digits, roughly equal to our expected rate of sales growth.”

The job cuts, representing about 7% of Baxter’s work force, will come mainly from U.S. sales and distribution operations, spokesman Geoffrey Fenton said.

“It is a reasonably bold and creative restructuring plan. It shows a strong determination by the company to turn itself around,” said analyst Kenneth Abramowitz of Sanford C. Bernstein & Co.

But Rita Freeman of PNC Financial Corp. in Philadelphia said the cuts were not deep enough to please investors.

Baxter appears to be preparing for dramatic changes in the U.S. health care system, said Sharon Dorsey Wagoner of Argus Research Corp. in New York.