CIGNA cuts jobs to cut costs; call centers not targeted

Financial woes have the company working to become profitable again.

By Robert Kazel, amednews staff. Jan. 27, 2003.

Continuing its efforts to turn red ink into black through overhead reduction and staff cuts, CIGNA Corp. said in January it would lay off more than 3,000 workers from many areas of its health care division. The company said call centers handling managed care accounts would not be directly affected.

Philadelphia-based CIGNA said it planned to trim 2,150 workers in the first three months of 2003. Roughly 1,000 additional layoffs would take place during the rest of this year. In November 2002, the company laid off 700 employees. Those layoffs, combined with the current ones, represent 7.5% of the firm's work force.

Earlier about CIGNA

"It's all with the object of streamlining our work force and making us more efficient," CIGNA Healthcare spokeswoman Gail Silver said.

Jobs that will be eliminated in the latest round of reductions will hit many departments of CIGNA Healthcare; they will include cuts in sales, marketing, finance, contracting and technology, she said.

But Silver said staff that doctors probably have most direct contact with, those at call centers that handle precertification and referral requests under managed care contracts, were not reduced in the latest cutbacks.

CIGNA announced an after-tax charge of $98 million for the fourth quarter of 2002 to cover severance pay for fired workers and facilities costs. The company will release its fourth-quarter results Feb. 7.

CIGNA expects to save $100 million this year from staff cuts.

According to CIGNA, the cuts from last year and this year will save the company about $100 million in 2003.

CIGNA had a net loss of $877 million in the third quarter of 2002. The layoffs represent the most recent in a series of austerity measures designed to put the struggling insurer back on a track to black ink, and the cuts were surrounded by an air of déjà vu.

A year ago, CIGNA announced 2,000 workers would lose their jobs in various units, including health care. Those cuts, which constituted 4.5% of the company's work force, involved reductions in areas that had more tangible connection to physicians, such as an increased use of technology in claims service and processing that enabled CIGNA to close several of its call centers.

Despite the belt-tightening, company shares lost more than half their value last year amid a disappointing performance by its health care operations as well as a formal investigation into company practices by the Securities and Exchange Commission.

CIGNA is the third health insurer to announce cutbacks in recent months. Aetna U.S. Healthcare and Humana Inc. also have announced they are cutting jobs.