At least 80 will lose their jobs as Blue Cross of RI outsources IT systems

Nov. 18--PROVIDENCE, R.I. -- Blue Cross and Blue Shield of Rhode Island is announcing to employees on Wednesday that, as a result of a decision to outsource vital information technology systems to Dell, the insurer is substantially downsizing its workforce, company officials have confirmed

The staffing reduction, expected to begin in January and be implemented over the next 18 months, will affect 260 of the 980 people Blue Cross employs, according to Michael Hudson, executive vice president and chief financial officer.

Eighty full-time employees will lose jobs outright. Another 50 will learn that their jobs are being eliminated, but that they'll be able to switch into other positions "likely without an interruption," Hudson said.

About 130 will be offered jobs with Dell working either at Blue Cross headquarters or at Dell's offices in downtown Providence, he said.

Expanding Dell's role at Blue Cross is projected to save the non-profit organization $100 million over the life of the seven-year contract, said Hudson. Dell has been doing IT work for Blue Cross for nearly 10 years and its most recent contract is due to expire in 2016.

Dell, said Hudson, can more effectively and efficiently undertake improvements to Blue Cross's online portals for subscribers and health care providers as well as to its mobile apps.

"We're not an IT company. We're a health insurer," he said, adding that the goal is to develop systems that are "simple" and "affordable."

By improving data and analytics, Dell can also help Blue Cross transition to focusing on managing the health of populations and reimbursing providers for the quality, not the quantity of medical services rendered to patients.

With the entire industry under pressure to move that direction and lower costs -- and plenty of national companies eager to acquire other insurers and expand market share -- "we have to compete" in order to remain "local and independent," Hudson.

Despite the outsourcing, the move in the long run "preserves the most jobs," Hudson said. "It's good for our associates and the local economy."

The agreement soon to be consummated with Dell is the result of a process that began in April when Blue Cross solicited information technology firms to submit proposals to serve as a long-term strategic partner for the insurer. Dell was selected, Hudson said, partly because it is familiar with Blue Cross operations and "they understand some of the inefficiencies we have."

Blue Cross is one of the state's top employers and a dominant player in health insurance, particularly its commercial plans. It insures close to 425,000 people, predominantly through employers.

The last time Blue Cross undertook a substantial layoff was in 2012.

Blue Cross has hired the firm Lee Hecht Harrison to assist employees needing to make a professional transition.

In late October, CEO and President Peter Andruszkiewicz announced that he will retire effective next May after five years at the helm of Blue Cross. Andruskiewicz, whose total compensation in 2014 was $1.1 million, was credited with helping to turn around Blue Cross finances and indicated in a statement that he had planned to retire for some time. He is 58.

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