Oxford Health’s Founder May Resign
Oxford Health Plans Inc., the troubled health-care provider, said Monday that it will announce a top management shake-up and financing package this week.
The company would not confirm speculation that its chairman and founder, Stephen F. Wiggins, would resign. But Oxford spokeswoman Nicole Reilly did say that the shake-up announcement--which could come as soon as today--would include information on Wiggins’ future with the company.
Wiggins’ resignation was expected to come as new investors install their own chief executive and take a 20% stake in the financially troubled managed-care company.
Wiggins, 41, put Oxford at the vanguard of the health maintenance organization industry by making it a favorite among doctors and patients. Oxford plans were among the first to give patients more choice by allowing them to see specialists without a referral and by offering alternative care such as acupuncture.
But the company lost track of the money it was owed--a problem it blamed on a new computer system--and angered doctors by making them wait up to a year for payments.
Analysts said Wiggins has led the company effectively, with impressive marketing skills and innovative ideas for delivering health care, but has been unable to manage the firm’s phenomenal growth.
Wiggins founded the company in his home in the mid-1980s, intent on bringing managed care to upscale doctors and consumers in metropolitan New York.
According to a report in the Wall Street Journal on Monday, the expected resignation of Wiggins is part of a package under which Texas Pacific Group and the buyout specialists Kohlberg Kravis Roberts & Co. will invest $700 million in Oxford.
The newspaper also said Oxford is about to report a fourth-quarter loss of more than $200 million--well above the $120-million deficit the company had forecast just two months ago. Oxford declined to comment on the loss figures.
Under the rescue plan, Wiggins will remain as a director, but another director will be named interim chairman, the newspaper reported. Norman Payson, former chief executive of Healthsource Inc., is the leading candidate to be named chief executive.
Between 1993 and 1997, Oxford grew from 217,000 members to nearly 2 million. But its costs also climbed.
Oxford reported its first loss as a public company in October. Its stock plunged about 60% and hasn’t recovered since then.
Investors seemed to take reports of Wiggins’ impending resignation in stride Monday, pushing the company’s stock down just 25 cents to $19.94 on the Nasdaq exchange.
The company was fined a record $3 million by New York insurance regulators in December over the HMO’s inability to pay claims on time and other irregularities.
