WellPoint Chief Executive Officer Angela Braly said enrollment is not expected to increase in 2010, following significant declines this year, according to an internal company memo obtained by Reuters.
WellPoint, the largest U.S. health insurer by membership, has seen its enrollment pressured as its employer customers lay off workers. It previously said it would struggle to increase profits next year.
In the memo to WellPoint managers, Braly said the company periodically needs to adjust its size to align with membership and that it planned to make these reductions thoughtfully and respectfully, but with appropriate speed.
Discretionary spending, of course, will get special scrutiny, but staffing levels also must decline if we are to succeed in these tough economic times.
A company spokeswoman, Kristin Binns, told Reuters the company reviews the size and skills of its workforce as the economic environment changes.
We are examining ways we can operate more efficiently in 2010, which we believe is essential to allow us to invest for the longer term and to innovate for the benefit of our customers and members, Binns said.
The memo did not specify how many job cuts WellPoint was considering and Binns did not elaborate. WellPoint employs about 42,000 workers.
In addition to possible job cuts, Braly in the memo said she asked her executive leadership team to examine the company's structure.
Braly also said internal initiatives designed to improve efficiency, such as how the company processes claims and operates call centers, would produce measurable results as soon as 2010. WellPoint is also planning a broader push to use technology to improve its business, the memo said.
The Indianapolis-based company had said in January that it would eliminate about 1,500 positions, following large rivals that also had cut jobs in the face of the weakening economy.
In July, WellPoint projected it would end 2009 with about 33.6 million members, which would be a decline of about 1.4 million, or 4 percent, from the end of 2008.
Second-quarter results topped analysts' estimates, but the company did not raise its 2009 profit forecast.
Chief Financial Officer Wayne DeVeydt told analysts on the company's second-quarter conference call in July that he would not expect operating earnings growth next year in this environment.
High unemployment along with slimmer margins with Medicare Advantage plans for the elderly are likely to weigh on earnings, the company said then.
WellPoint shares closed down $1.09, or nearly 2 percent, at $53.70 on the New York Stock Exchange.
(Reporting by Lewis Krauskopf, editing by Gerald E. McCormick, Lisa Von Ahn and Carol Bishopric)