Carriers Cut Jobs, Not Services

As healthcare costs continue to rise in a strained economy, health insurers are being forced to take tough measures. Even those firms enjoying relatively good financial results are under pressure to run more efficiently, and that means cutting the workforce.

Having announced 4,400 job cuts in 2001, Aetna ( Hartford, $43.25 billion in assets) announced this past December that it would cut 690 more jobs. In January CIGNA Corp. (Philadelphia, $91.6 billion in consolidated assets) announced cuts of 3,250 employees, and Humana Inc. (Louisville, $4.4 billion total assets) said it would cut about 2,300 jobs.

While these carriers' technology organizations have also been affected by the cuts, their work actually has served as an enabler for winnowing the workforce. Among the efficiency measures undertaken by member companies, "we see new technologies being applied right now to try to streamline processes," says Devin Jopp, chief information officer of the Health Insurance Association of America (HIAA, Washington, DC).

This is especially true at Humana, which has enjoyed relatively strong financial results recently. According to Bruce Goodman, the company's CIO, "Humana's move to a new core processing platform, combined with additional self-funding technology investments, has allowed Humana to reap the benefit of continuously improving efficiencies."

Meanwhile, Aetna worked to change weakened financial fortunes by "appropriately pricing" its products, according to company spokesperson Fred Laberge. The result was a drop in membership of about a third, necessitating its recent staff downsizing. "What we've done is really try to appropriately size our organizations and to lower our IT spending," Laberge says.

Tough All Over

Health insurance companies are, of course, not the only organizations driven to job cuts, including those in IT. For example, Boston-based John Hancock Financial Services ($124 billion in assets under management) is considering an outsourcing strategy that would result in its shedding at least 300 employees, according to industry sources. The Phoenix Companies (Hartford, $22.5 billion in assets) is also cutting back IT jobs owing to restructuring and process improvements, according to CIO Sherry Manetta.

"As a result of these increased efficiencies, we expect to operate in 2003 at a staff level that is about 10 percent below our staffing level in 2002," she reports.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio