Blue Cross and Blue Shield of Missouri, which is in merger talks with St. Louis-based BJC Health System, has exiled its president to the corporate equivalent of Siberia.
The executive management change, downplayed by the state's largest insurer, occurred after the Blues plan ran into legal trouble regarding its conversion to a for-profit company and simultaneously with the company reporting a multimillion-dollar loss.
The plan stripped Roy R. Heimburger, 59, of his post as president and chief executive officer of its for-profit managed-care subsidiary, Alliance Blue Cross and Blue Shield. Although he retained his position of president and CEO of the parent company, his responsibilities, Alliance said, will now "focus on further developing and enhancing (the Missouri Blues') relationship with the Blue Cross and Blue Shield Association."
The change in jobs will not trigger Heimburger's golden parachute, a Blues spokeswoman said.
John A. O'Rourke, 53, succeeds Heimburger at Alliance, which is listed on the New York Stock Exchange as Right-Choice Managed Care.
The Blues is engaged in a protracted disagreement with Missouri Insurance Director Jay Angoff, who alleges that the plan moved the majority of its business into the for-profit subsidiary without his permission. Angoff is demanding compensation to the public for what he says is a conversion from not-for-profit to for-profit status.
The Blues was shaken when a county judge ruled late last year that the conversion was illegal and that Angoff was authorized to penalize the insurer, up to and including dissolution (Jan. 6, p. 2). The Blues' appeal of the decision is pending.
Also, after months of speculation, the Blues confirmed in January that it's exploring a "strategic combination" with BJC Health System, the largest integrated health provider in the St. Louis region (Jan. 27, p. 2).
BJC declined to comment on the Blues' management shakeup or the combination talks.
Meanwhile, Alliance's profit picture has dimmed. On Feb. 18, the same day it announced Heimburger's demotion, Alliance revealed substantial losses in its fourth quarter.
For the quarter ended Dec. 31, 1996, Alliance lost $3.7 million, compared with net income of $4.9 million during the year-ago quarter. The loss occurred despite a 10% increase in revenues to $170 million in the quarter from $155 million in the year-ago period.
For the year, Alliance recorded a net loss of $2 million, compared with a $23.6 million profit in 1995. Revenues increased 10% to $653 million.
O'Rourke joined the Blues when it acquired HealthLink, a large PPO, in 1995. HealthLink was created in the mid-1980s by a consortium of eight hospitals, including Christian Hospital, which is now the "C" in BJC. O'Rourke has served as president and CEO of HealthLink since 1985.
He will be chief operating officer of the parent Missouri Blues as well as CEO of Alliance.