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Md. Blues combining units to boost sales Insurer hopes to regain footing in managed care


The state's largest health insurer, Blue Cross and Blue Shield of Maryland, is centralizing its operations in an effort to recapture some of the business it lost in the area of managed care, the company's president and chief executive said yesterday.

The restructuring of the company is aimed at better competing for customers that it lost over the past year as its reputation suffered amid a U.S. Senate investigation of its management. At the same time, some of the country's largest managed care companies redoubled enrollment efforts in Maryland.

In his first interview since taking the helm of the beleaguered company 90 days ago, William L. Jews said the company was losing business because its decentralized organization forced employees to emphasize selling products rather than responding to customers and the marketplace.

He said Blue Cross has begun combining personnel offices, customer service and claims operations, as well as sales and marketing staffs. Each business unit has been doing its own hiring and selling, a practice begun under the tenure of his predecessor.

While the company is not planning layoffs, Mr. Jews said, he did not rule them out, saying he would first seek cost-savings elsewhere and retrain workers as needed.

The changes will make it easier for individuals and companies to switch from traditional indemnity health insurance to managed care products, including the company's health maintenance organizations, Mr. Jews said. Until now, he said, companies that wanted an alternative to traditional health insurance often turned to other insurers.

"We want to present one face to the customer with a myriad of products," he said.

Mr. Jews, 41, took control of the Blues on April 1, after serving stints as president at two Maryland hospital systems. He took over Blue Cross as the company's traditional product, which pays subscribers' health care claims after they arise, loses customers to managed care networks, which pay a set fee to doctors and take a more active approach in arranging for health care.

The Blues' managed care business, including two health maintenance organizations, has only recently become profitable. The company has battled to increase its hold in this market as it continues to expand.

About 250,000 of the 1.5 million people served by Blue Cross are members of its HMOs, and that number has been shrinking.

"I am concerned we are losing enrollment . . . but I would be more concerned if we did not have a plan," Mr. Jews said.

He said he expects profits for the second quarter, which ended June 30, to be similar to the year's first three months, during which the company earned $9.4 million. The company pays $1.5 billion in claims a year.

However, he said, he has asked company officials to revise their estimates for the remainder of the year because the insurer was headed into a "down cycle," during which costs were expected to rise faster than premiums.

Overall, Mr. Jews said he expects a profitable year. But he said the company might have to increase expenses in the short term to regain market share.

The changes planned at the company are not expected to involve a large-scale movement of employees, Mr. Jews said. He said the restructuring was intended to allow him "to have accountability for everything we are doing."

He said the company would continue to administer insurance programs for companies that insure themselves. About 57 percent of the premiums collected each year are from these self-insured plans.

Mr. Jews' effort at the Blues comes after a previous attempt to decentralize operations at the insurer, instituted during the tenure of his predecessor, Carl J. Sardegna. At the time, the company acted on the theory that decentralizing would allow employees to be creative and independent.

Mr. Jews predicted yesterday that Blues customers would begin to see results this fall when efforts to turn around the company take hold.

Meanwhile, he said, he was telling employees and his friends that turning the giant insurer was "kind of like driving the Queen Mary. It may take a while."

Meanwhile, he said, the company would seek to restore a loyal relationship with customers by improving management, customer service and speaking with integrity and honesty.

"This is a huge, huge company with a lot of relationships and dealings we have to sort through," he said, "and I will tell you, we'll make mistakes, but they'll be honest mistakes."

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