The Canadian Press - ONLINE EDITION
Managed-care company Aetna to eliminate 1,000 jobs in cost-cutting move
HARTFORD, Conn. - Managed-care company Aetna Inc. plans to cut 1,000 jobs, or nearly three per cent of its work force, by the year's end to reduce costs and adjust to the slowing economy.
The Hartford, Conn.-based insurer said Wednesday 375 positions will be eliminated in its home state of Connecticut and 165 will be cut in Pennsylvania, mostly in the Philadelphia suburb of Blue Bell.
The rest of the cuts will be spread out, spokesman Fred Laberge said. Aetna operates in all 50 states. He added that the insurer is not pulling out of any one location or market.
"We're trying wherever possible just to combine efforts," he said. "It's not eliminating one area, it's just cutting back in a variety of staff areas."
Employees were notified Wednesday. Each person will receive nine weeks of salary, and additional severance will be based on the employee's length of service with Aetna.
The insurer announced the cuts a day after the company reassured analysts in a conference call that it remains financially strong and expects earnings growth next year. Aetna chief executive Ronald A. Williams repeated that message in a statement released Wednesday.
"These actions will reduce our operating costs and allow us to manage through the economic downturn from a position of strength," he said in the statement. "The fundamentals of our business are solid, and we continue to win in the marketplace."
Laberge said a call Tuesday with analysts focused on the company's overall health and its investment portfolio. Wednesday's action was more of a reaction to the current economy. He noted that Aetna has added more than 5,700 jobs since March 2007.
"You can think about this as a scaling back of that growth because of the economic downturn," he said.
Aetna warned employees last month that it planned "selective" staff cuts to help deal with a slowdown expected to continue into next year.
Managed-care companies lose business when their employer customers cut jobs and decrease the number of people covered by insurance. Aetna, with a medical enrolment of 17.7 million people, is the third-largest U.S. managed-care company, trailing only WellPoint Inc. and UnitedHealth Group Inc. Aetna employs 36,208 people.
However, Aetna expects to add 800,000 new members next year, as Bank of America Corp. and Home Depot Inc. join its customer list.
The company will take a charge of about US$35 million in the fourth quarter for the moves.
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