business
Mass. Blues reports financial loss; CEO resigns
NEWS IN BRIEF — Posted March 29, 2010
Blue Cross Blue Shield of Massachusetts Chair and CEO Cleve Killingsworth resigned in mid-March after an earlier report that the Blues plan had lost $149.2 million in 2009 on revenue of $13.2 billion.
The Blues said Killingsworth was succeeded on a temporary basis as CEO by William van Faasen, who had once handpicked Killingsworth to succeed him in that post. On March 5, Greater Boston Chamber of Commerce President and CEO Paul Guzzi was elected chair, in what the Blues said was an already planned move to separate the chair and CEO positions.
The Blues' annual loss was the only one in Killingsworth's five-year tenure as CEO. The Blues blamed that loss on job cuts, which reduced membership; increased utilization of services due to the seasonal and H1N1 flu; a rise in elective procedures; and a rise in utilization of behavioral health services. The Blues also said it had higher-than-anticipated costs in merging its individual and small-group markets, and that nearly two-thirds of the loss -- $95 million-- represented a write-off of certain investment assets.
Killingsworth's tenure was notable for his introduction of a per-member, per-month payment system for physicians and hospitals, coupled with bonuses for reaching certain quality measures. The Blues hoped the actions would reduce what it saw as high utilization encouraged by fee-for-service payment. But analysts said that in the short term, it created higher medical costs for the Blues.
Note: This item originally appeared at http://www.ama-assn.org/amednews/2010/03/29/bibf0329.htm.
