ST. LOUIS-The for-profit subsidiary of Blue Cross and Blue Shield of Missouri will move its claims, customer service, billing and provider services functions out of St. Louis to less expensive locations in Missouri.
Alliance Blue Cross and Blue Shield cited the desire "to create a cost structure that is competitive and in line with industry standards." The move is expected to save $3 million to $4 million a year.
Some 380 employees will be invited to relocate starting in January 1997 and ending in the middle of that year. The first 40 jobs to be moved out of St. Louis will go to an existing service facility in Springfield. Later, two other sites will be chosen.
A press release said employees "will be offered compensation levels consistent with salaries for similar positions" in that community. That means a pay cut of as much as 20% to 30%, said Clara Webb Kinner, Alliance spokeswoman. She said St. Louis Blues employees now make about 20% above market rates.
Alliance will provide relocation assistance to those who move. Outplacement services will be offered to "those electing to leave the company." Alliance headquarters will remain in St. Louis.
The move will result in an estimated charge of $6 million to $8 million against earnings later in the year.
Alliance is the largest managed-care provider in the state and covers 1.7 million lives. It does business under the name RightChoice Managed Care, which is listed on the New York Stock Exchange as RIT.
On April 29, RightChoice reported a 9% increase in net income for the quarter ended March 31, to $8.2 million, or 44 cents per share, compared with the year-ago quarter.
Underwritten membership totaled 464,000 on March 31, up 9% compared with the previous year. Much of that was because of a 31% increase in HMO enrollment to 98,000.
The medical-loss ratio for Right-Choice rose slightly to 74.5% from 74.0% the year earlier. The general and administrative expense ratio declined to 21.8% from 22.7%.
-J. Duncan Moore Jr.