Health Care Service Corp. is cutting dozens of employees less than six months after CEO Paula Steiner's departure kick-started a wave of executive exits.
"A few dozen middle-management positions," including vice president positions, were eliminated this week at the nation's sixth-largest health insurer, spokesman Greg Thompson told Crain's.
Thompson declined to say exactly how many employees would lose their jobs and where the cuts were happening. Chicago-based HCSC, which owns Blue Cross and Blue Shield plans in Illinois and four other states, has more than 23,000 total employees—about 11,400 based in Illinois, according to the company's website.
Thompson noted the company was not required to file a Work Adjustment & Retraining Notification, or WARN report, which is required in Illinois when a business with 100 or more full-time workers lays off at least 50 people at a single site.
Thompson said in an emailed statement, "These changes will prepare us to meet new opportunities to best serve our members and will have no impact on member or provider service staffing levels, which increased in 2019 and will continue to expand in 2020."
In addition to Steiner, who spent more than three decades at Blue Cross-associated companies, a handful of executives left the insurer this year, including Chief Financial Officer Eric Feldstein, Chief Information Officer Steve Betts and Chief Human Resources Officer Nazneen Razi.
Director M. Ray Perryman left the board in October after 17 years.
Meanwhile, last year was a banner year for HCSC. Net income more than tripled to $4.1 billion, due mostly to the Trump administration's 2017 tax law changes, as revenue rose 10% to $36 billion. Eight of the 10 highest-paid executives—including former leaders—got raises. So did seven of the company's nine returning non-executive directors.
Despite the layoffs, Thompson said HCSC is still hiring and has plans to add more than 1,000 jobs next year.
"Over the past several years, we have created an imbalance in our company by under-investing in member services and customer-facing capabilities and over-investing in our non-customer-facing resources, especially in the middle-management and executive ranks," David Lesar, HCSC board member and interim CEO, said in an internal memo obtained by Crain's. The memo goes on to say, "as we execute (HCSC President) Maurice (Smith)'s more state-focused strategy, we expect significant membership growth that will result in a larger workforce and future upward career opportunities throughout the company."
This article was originally published in Crain's Chicago Business.