PacifiCare Will Cut 250 Employees as It Struggles to Regain Its Footing
PacifiCare Health Systems, which operates the nation’s largest managed-care plan for people on Medicare, said Wednesday that it will lay off 250 employees--about 3% of its work force--over the next year as it strives to cut costs and improve efficiency.
An additional 200 positions will be lost through attrition. The total reduction, spread throughout PacifiCare’s national operations, includes 120 to 150 jobs in California through layoffs and attrition combined, company spokeswoman Lisa Boyette said.
The cost-cutting measure is yet another example of turmoil at the Santa Ana-based health maintenance organization, which has been hard hit by changes in the industry, as well as by its own financial woes.
Last fall, PacifiCare’s chief financial officer resigned, citing differences with top management over a recovery plan. Shortly after that, the company restructured its executive ranks, demoting Chairman and Chief Executive Alan Hoops to president and chief executive, among other changes.
The reshuffling, which has been continuing since September, is part of the company’s efforts to right itself after a variety of financial blows, from cuts in Medicare reimbursement for its 1-million-member Secure Horizons program, to the decline of the very business model on which it was structured.
The employee cuts announced Wednesday will be implemented in stages, Boyette said. About 90 employees are being sent home immediately and 160 more will be phased out over the next year.
Employees who are laid off will be encouraged to apply for other positions within the company, but Boyette would not say how many might be accommodated. Employees who leave the company will receive job counseling and severance pay, she said.
Boyette would not say how many employees in Orange County might lose their jobs, but about 4,100 of the company’s 8,300 employees work out of offices in Santa Ana and Cypress.
As a result of the layoffs and other changes, PacifiCare said it will take a restructuring charge of $7 million to $8 million in the first quarter.
PacifiCare operates HMOs and other managed-care plans for 3.7 million members in nine states and in Guam.
PacifiCare’s stock fell on the news, dropping $1.44 a share Wednesday to close at $50.06 in Nasdaq trading.
