THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, October 11, 1996 TAG: 9610110476
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: STAFF AND WIRE REPORT
DATELINE: HARTFORD CONN. LENGTH: 48 lines
Aetna Inc. Thursday announced it will eliminate 4,400 jobs, or about 13 percent of its work force, and close 31 health claims processing centers in a restructuring. One of the centers to be closed, in Richmond, has 207 employees.
The reorganization stems largely from Aetna's $9 billion merger this summer with the Blue Bell, Pa.-based health maintenance organization U.S. Healthcare Inc. That deal created the nation's largest health insurance provider, with 23 million customers.
Aetna is moving away from a highly decentralized way of running its health care business and adopting a regional approach, a model favored by the company it acquired.
Health care businesses across the nation have been consolidating and streamlining in order to maintain profits in an increasingly competitive field.
Under the restructuring plan, Aetna will cut about 7,500 jobs by the end of 1998 in its health care division. The restructuring will also result in new hiring, making for net job reductions of 4,000 in the division, now called Aetna U.S. Healthcare. About 400 positions will be cut in retirement services.
Aetna now employs about 33,700. The jobs most affected will be claims processers and employees in systems operations, said company spokesman Joyce Oberdorf. New hiring will take place in sales and marketing.
Aetna U.S. Healthcare will reduce its number of primary service centers - the places claims are processed - from 43 to 12 as part of its new regional approach to providing managed care.
The company will have six regional headquarters, in Middletown, Conn.; Blue Bell, Pa.; Atlanta; Chicago; Dallas; and Walnut Creek, Calif. Also, it will have six regional operations centers, including one in Greensboro, N.C., that will serve Virginia and seven other states in the mid-Atlantic and Southeast. The Greensboro center's work force of 672 will grow, Aetna spokesman Walt Cherniak said. But he said it is too early to estimate by how much.
The functions of the Richmond center will be taken over by the larger center in Greensboro. That transition is expected to last about 18 months.
Aetna said it will take an after-tax charge of about $32 million in the third quarter to account for restructuring of Aetna Retirement Services, and a $275 million charge in the fourth quarter related to the integration of its health business. The costs include severance payments and asset writeoffs. MEMO: Staff writer Dave Mayfield contributed to this report.
KEYWORDS: LAYOFFS by CNB