Highmark offers buyouts to employees [The Pittsburgh Tribune-Review]

Feb. 20--Health insurer Highmark Inc. offered voluntary severance packages this week to employees in some departments, as it tries to trim 300 positions from its payroll.

More than 1,000 employees in management, operations support and claims processing got the voluntary resignation offers, spokesman Michael Weinstein said Friday. Downtown-based Highmark wants to cut its operating expenses by $20 million this year, as a way to better compete with large, publicly held insurance companies, he said.

"It's imperative that we identify ways to reduce our administrative costs to customers," Weinstein said.

Highmark early last year moved into automated claims processing, froze senior managers' salaries, changed worker benefits and reduced energy costs. To achieve this year's cost-cutting goal, "Natural attrition will not be sufficient," he said.

The offer went to employees in areas where streamlining and automation has taken place.

Highmark's employee total has remained fairly steady at about 11,000 in Western and Central Pennsylvania, and 20,000 overall. Jobs have been cut in some areas, including 10 positions eliminated in November. But some parts of the business, such as vision stores and benefits, are growing and adding staff, Weinstein said.

Employees who got the offer have a few weeks to decide whether to accept it, he said.

Highmark reported last April that its 2008 profit of $94.1 million was almost 75 percent lower than its net income from 2007. Another disappointment occurred in 2008: Pennsylvania regulators set conditions on a proposed merger with Independence Blue Cross of Philadelphia that ultimately led to the companies abandoning the deal.

CEO Ken Melani said at the time the merger would have created $1.3 billion in financial benefits through greater efficiency.

Kim Leonard is a Pittsburgh Tribune-Review staff writer and can be reached at 412-380-5606 or via e-mail.

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