Blue Cross eliminating 103 jobs [The Providence Journal, R.I.]

July 22--Blue Cross & Blue Shield of Rhode Island announced on Wednesday that it has eliminated 103 jobs throughout the company to cut expenses.

The nonprofit company said it cut 58 filled positions and 45 vacant ones as part of an effort to reduce expenses by $15 million over the next two years. Rhode Island's dominant insurer still employs more than 1,000. Blue Cross last reduced the size of its work force in 2008, when 74 positions were eliminated.

"The decision to reduce our work force was very difficult, particularly during these challenging economic times," spokeswoman Laura Calenda said in a statement. "But as part of our ongoing commitment to provide Rhode Islanders with access to high-quality and affordable health care, and to ensure [Blue Cross'] financial stability, it was necessary to reduce our operating expenses. We have an obligation to our members to ensure that we are operating as efficiently and effectively as possible."

Calenda said that Blue Cross is confronting health-care costs that are projected to continue outpacing inflation.

She declined to specify any jobs that have been cut "out of respect for the privacy of the employees." But she did say that "the reductions represented a broad cross-spectrum of the organization in terms of both function and level."

As the state's largest health insurer, Blue Cross has been criticized in recent years for spending $125 million on a new 13-story headquarters in downtown Providence and seeking state approval for double-digit rate hikes for its commercial subscribers.

Recently, it requested to raise premiums an average 12.4 percent for small businesses (50 or fewer employees) and 13.4 percent for large businesses. Health Insurance Commissioner Christopher F. Koller approved increases averaging 9.8 percent for each.

When asked if the rates approved by Koller were a factor in the layoffs, Calenda declined comment. Nor would she say whether the company's declining reserves were a factor.

Blue Cross reserves fell from $713 per member in 2008 to $588 in 2009, a figure equal to 17.5 percent of operating revenues. That's below the range of 23 percent to 31 percent recommended by a study commissioned by the state.

Blue Cross also posted a loss of $100 million in 2009.

Koller could not be reached immediately for comment on the layoffs.

Donald Nokes, president of Warwick-based NetCenergy and a board member of the Rhode Island Business Group on Health, which has been critical of soaring premium hikes, had a mixed reaction to the news.

"As a business person, certainly, I am concerned about the impact to the state to have yet again more jobs lost," he said.

He also worried about how it would affect Blue Cross subscribers.

"We've had to make changes and tighten our belts and make adjustments. And when we do that, we hope it's not going to impact our customers. I'm hoping these changes are just belt-tightening exercises that don't affect their ability serve their customers."

William J. Lynch, Democratic candidate for the 1st District Congressional seat, condemned the job cuts.

"This painful example reinforces my premise that overpaid executives at Blue Cross spent too much money on their lavish new headquarters to the detriment of policyholders and employees. Once again, I'm calling on CEO James Purcell to step down for the betterment of Rhode Island's health-care delivery system.

"At a time when we need to focus on creating jobs, Blue Cross is once again contributing to Rhode Island's economic woes. This type of mismanagement cannot continue at this rate. Under Purcell's tenure, the company has reported a $100-million loss for fiscal year 2009, spent more than $100 million constructing a new office building and is now eliminating 103 jobs."

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