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HealthNow cuts back on staff

HealthNow New York has cut about 17 jobs as the health insurer realigns how it operates, tightens its focus on employers and members, and strengthens its competitive posture.

The cuts represent just 1.3 percent of the company's 1,300 employees in Buffalo and less than 1 percent of its 2,300 overall workers. All the affected people are in Western New York, and officials said more cuts are possible, in small numbers over time, as the company's actions make some jobs unnecessary.

However, CEO Alphonso O'Neill-White says that the job cuts are not about across-the-board reductions designed strictly to save money. Instead, he said, they result from the company's efforts to not only survive but position itself to take market share as the company and the industry face radical changes.

In particular, he noted that the Buffalo-based parent of BlueCross BlueShield of Western New York is confronting not only the ongoing challenges of its aging marketplace, but also the global recession, the state's budget crisis, and the potential for significant healthcare reform at the federal level.

"We're basically facing almost the perfect storm in health care right now," he said. "The net result is going to be a dramatically changed marketplace."

HealthNow has already been transforming its business model and culture to be more attentive to employer and member needs. The company revamped its service structure, trimmed retiree health costs, and modernized its pension. It's also been taking steps to lower its operating expenses and run more efficiently, and is pushing the use of technology, both internally and for customers.

But O'Neill-White said it's now speeding up those changes so it's not left behind. Insurers are already operating with lower revenues and tighter profit margins, and he said that will continue, if not worsen.

The crises and potential for reform are already creating demand for new and different types of products, he said, in particular with the likely expansion of government programs to cover more of the 45.7 million uninsured nationwide, including 2.66 million in New York, according to the U.S. Census Bureau.

In response, HealthNow merged two of its four business units, combining its "major groups" and "administrative services only" divisions into a single large group unit.

It also created two new business areas, one to streamline the company's operations so it runs more efficiently and one to better manage medical expenses for members. Currently, medical expenses comprise 90 cents of every dollar of revenue.

And since 80 percent of its members are in age groups that tend to prefer electronic self-help and online tools, the company is leveraging technology to focus more on Web services. "That's where the market is going and we've got to be there," O'Neill-White said.

e-mail: jepstein@buffnews.com

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