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Maxicare Plans to Lay Off 200, Including 40 in L.A.

February 20, 1988|CARLA LAZZARESCHI | Times Staff Writer

Still feeling the pinch from its ambitious expansion two years ago, Maxicare Health Plans said Friday that it is laying off about 200 of its 7,000 employees nationwide, including about 40 at its corporate headquarters in Los Angeles.

The layoffs, the second round of reductions since December, when 26 jobs were axed, are expected to save $9 million annually, the company said. The latest layoffs include 100 full-time, permanent employees and 100 temporary workers.

A company spokesman said the reductions were made in all operations areas and affect clerical workers as well as white-collar, middle management employees. The cuts were effective Friday.

In addition, Maxicare, which operates health maintenance plans in 25 states, said it is eliminating overlapping data processing operations acquired when the company bought two large health plans in 1986.

The layoffs came as no surprise to analysts, who said they had been expecting the company to whittle its operations as it gradually completed merging HealthAmerica Corp. and HealthCare USA--the two companies it purchased in 1986--into its own operations.

"It's about time," said Larry Selwitz, an analyst with Bateman Eichler, Hill Richards in Los Angeles. "The plan was to reduce the work force when the merger was completed."

Although the purchase of HealthAmerica and HealthCare USA turned Maxicare into the nation's largest investor-owned health maintenance organization, the moves have proven costly. Since the acquisitions, Maxicare has been losing money. For the first nine months of 1987, the most recently available reporting period, the company lost $28.4 million on revenue of $1.38 billion.

Selwitz said he expects the company to report a loss of between $5 million and $8 million for the final quarter of 1987 when it releases its results.

However, he predicted that the company would be turning a profit by the end of 1988.

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