Oxford To Announce Shake-Up
NORWALK, Conn. (AP) _ Oxford Health Plans Inc., the troubled health care provider, said Monday it will announce a top management shake-up and financing package this week.
The company would not confirm speculation that its chairman and founder Stephen F. Wiggins would resign, but Oxford spokeswoman Nicole Reilly did say that the shake-up announcement _ which could come as soon as Tuesday _ would include information on Wiggins’ future with the company.
Wiggins’ resignation was expected to come as new investors install their own chief executive officer and take a 20 percent stake in the financially troubled managed care company.
Wiggins put Oxford at the vanguard of the health maintenance organization industry by making it a favorite among doctors and patients. Oxford plans were among the first to give patients more choice by allowing them to see specialists without a referral and by offering alternative care such as acupuncture.
But the company lost track of the money it was owed _ a problem it blamed on a new computer system _ and angered doctors by making them wait up to a year for payments.
Analysts said Wiggins lead the company effectively, with impressive marketing skills and innovative ideas for delivering health care, but was unable to manage the company’s phenomenal growth.
``I think of him as one of the few executives to bring strong business management principles to the managed care field ... with a strategy that addressed consumer needs, particularly those of the patients,″ said Tom Hodapp, an analyst at BancAmerica Robertson, Stephens.
Wiggins, now 41, founded the company in his home’s second bedroom in the mid-1980s, intent on bringing managed care to upscale doctors and consumers in metropolitan New York.
Oxford was the first HMO to offer its own network of chiropractors, massage therapists and other so-called alternative providers.
The Wall Street Journal reported Monday that the expected resignation of Wiggins is part of a package under which Texas Pacific Group and the buyout specialists Kohlberg Kravis Roberts & Co. will invest $700 million in Oxford.
The newspaper said Oxford is also about to report a fourth-quarter loss of more than $200 million _ well above the $120 million deficit Oxford had forecast just two months ago. Oxford declined comment on the loss figures.
Under the rescue plan, Wiggins will remain as a director, but another director will be named interim chairman, the newspaper reported. Norman Payson, former chief executive officer of Healthsource Inc., is the leading candidate to be named chief executive officer.
The insurer recently demoted its new chief executive officer, William Sullivan, to president and began a search for a new CEO.
The newspaper, citing unidentified people familiar with the transaction, said the deal would give the investor group a nearly 20 percent stake in the company.
Between 1993 and 1997, Oxford company grew from 217,000 to nearly two million members. But its costs also climbed.
Oxford reported its first loss as a public company in October. Its stock plunged about 60 percent, and hasn’t recovered since then.
But investors seemed to take reports of Wiggin’s impending resignation in stride Monday, pushing the company’s stock down just 25 cents. Oxford shares closed at $19.93 3/4 on the Nasdaq stock exchange.
The company was fined a record $3 million by New York insurance regulators in December over the HMO’s inability to pay claims on time and other irregularities. Oxford also faces scores of shareholder lawsuits.