With the layoff of two dozen mid- to upper-level managers, health insurer Humana announced a corporate restructuring aimed at what it calls a fundamental cultural change.
Louisville, Ky.-based Humana, which recently lowered second-quarter earnings projections, said it will reduce bureaucracy to do its job better and streamline decisionmaking.
Humana said analysts' earnings projections of 33 cents per share for the quarter may fall as much as 46% to between 18 cents and 22 cents per share.
Humana said its estimated earnings decline is due to high utilization of medical services and substantial losses in its District of Columbia market and other new markets.
The restructuring will refocus resources "to quickly bring Humana closer to its customers, business partners and shareholders," said Greg Donaldson, a company spokesman.
The layoffs, affecting staff at corporate headquarters, are not a cost-cutting move, Donaldson said. He would not give details of the savings involved. The layoffs signal a shift in "structure and philosophy," he said.
Humana will concentrate on "key operating areas, including provider affairs and re-engineering, customer service and quality, sales, marketing, specialty services and risk management," the company said in a written statement.
"We are doubling the time and attention paid to medical management. Our success in the future is tied to our ability to work with our providers as partners," said Gregory H. Wolf, chief operating officer, in the statement.
Humana also announced that W.R. Drury, its chief financial officer, has resigned, effective immediately. Drury's resignation is not connected to the company's restructuring moves, Donaldson said.
Conceding that the strategy of integrating its 78 hospitals with its insurance operations had failed, Humana's board voted in August 1992 to split into two separate, publicly traded companies. Physicians, alienated by Humana's demand for discounts, had dramatically reduced admissions to its hospitals. Since then, the company has struggled with damaged provider relations.