Blue Cross of Illinois parent Health Care Service Corp. is cutting about 400 employees as it positions itself for growth in a rapidly changing industry.
The layoffs, announced internally today, include middle management positions—mostly employees with senior manager and director titles, HCSC spokesman Greg Thompson told Crain's.
Thompson said the affected employees are based across the company's service areas. HCSC—which owns Blue Cross & Blue Shield plans in Illinois, Texas, Montana, Oklahoma and New Mexico—has about 24,000 total employees.
"The planning process we've gone through is built around our business strategy to address inefficiencies and redundancies in roles and responsibilities, shift more resources to the local markets, and enhance our member services and customer-facing capacity," Thompson said.
HCSC has had a relatively cautious expansion strategy amid rapid industry consolidation. Other big insurers, such as UnitedHealth Group, have engineered multibillion-dollar transactions that obliterate traditional boundaries between insurers, pharmacies and doctors.
As the healthcare industry transitions from fee-for-service to paying for value, "it potentially requires a reallocation of risk across different players in the health care landscape—it also might require a different level of scale," says Amanda Starc, an associate professor at Northwestern University's Kellogg School of Management. "Moving from a traditional business model to figuring out how to actually lower the cost of care overall, that is a very different business model. . . .It's not surprising that you would see an internal reorganization that reflects external changes in the market environment."
In an internal memo announcing the layoffs, HCSC President Maurice Smith said, "We made a number of changes to ensure we have the structure and resources to best serve our members now and into the future."
Despite the layoffs, Thompson said HCSC plans to add about 1,000 new jobs this year in "customer and provider service, technology and digital capabilities."
Meanwhile, HCSC recently tightened its dress code policy, according to a separate internal memo obtained by Crain's. "As HCSC positions itself for growth, we will embrace a professional business attire policy, with more relaxed approach on Fridays," the memo says.
The change led some employees to question whether a merger or acquisition is in the works, but Thompson said the new dress code rules are about providing guidance and reminding employees they work in a professional environment.
Still, dress code is among messages and behaviors that reinforce company culture during a merger integration, according to a March 2019 article from consulting firm McKinsey. To "create a sense of shared endeavor," leaders could change the dress code, "to match that of the acquired company, to signal the change on both sides," the article says.
When meeting with senior executives and outside parties, such as clients, HCSC employees must now wear suits, dresses or suit-style separates, according to the memo. And for internal team and leadership meetings, employees must wear dress slacks or khakis, dress shirts, skirts or tailored dresses. In the memo, HCSC encourages employees to adopt the policy in a way that is consistent with their gender identity, religious practices and cultural norms.
This article was originally published in Crain's Chicago Business.