Layoffs and budget cuts reign as Coram attempts a new focus
January 4, 2000 2 minutes read
Layoffs and budget cuts reign as Coram attempts a new focus
An HHBR Staff Report
Coram Healthcare (Denver) said it will save $15 million a year by trimming its operating expenses, cutting back on positions, and consolidating services. Part of the new focus for Coram will be rededicating itself to its core business, home care for those using intravenous medication.
Coram officials have yet to say how many positions will be cut, according to the Associated Press. The announcement of cutbacks follows a November report from the company, saying that it expects 3Q99 losses of $15.2 million. The realignment involves a top-shelf corporate shuffle of vice presidents who will be responsible for nutrition, hemophilia, and transplant-related therapy.
"To try to recreate shareholder value, we're going to have a top down, total corporate focus to try to grow these key therapies and change the mix of Coram's infusion business," said Coram's chairman/president/CEO, Daniel Crowley.
Crowley said after initially reviewing internal operating costs, it was clear that change was necessary. He added that he plans to reduce operating expenses through a primary case management model to improve efficiency and maintain quality.
"This market will be dominated by low-cost, efficient providers of high-quality services," he said. "We are moving quickly to identify challenges, focus on key therapies, cut costs, and install strong management. There remain, however, significant challenges facing the company and uncertainties that could materially affect our success."
Pending a company review by outside auditors, Coram officials said, charges of $25 million to $30 million will be taken in 4Q99 to reflect the new changes, including severance costs and various balance sheet adjustments. Also, Coram’s Resource Network lost about $3.8 million in 3Q99 and has filed for bankruptcy.
Resource Network and Coram Independent Practice Association managed a network of contract providers for managed care associations, according to the Associated Press. Company officials say Resource Network crashed into the shoals when it signed an agreement with Aetna U.S. Healthcare (Blue Bell, PA). Aetna contracted for home health services through Coram in the agreement. Both have since filed lawsuits against the other, Coram alleging that customer demand was underestimated by Aetna by half and Aetna countering that Coram could not duck out of the agreement and must keep providing services.
Vice presidents with new responsibilities are Michael Saracco heading nutrition, Eric Hill leading hemophilia, and Linda McBride in charge of transplant-related therapies.
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