Related article in NYT.
January 9, 1998
Oxford Health Announces Plans to Revamp
Its Management
By REED ABELSON
EW YORK -- Oxford Health Plans, the troubled managed care
company, announced a series of moves on Thursday intended to
bolster the depth of its top management. The company said it would
hire a new chief executive and appointed Albert Koch, a well-regarded
turnaround specialist, as its temporary chief financial officer.
Oxford has asked the executive search firm of Spencer Stuart to conduct
the search for a new chief executive, said a spokeswoman from Hill &
Knowlton, which is handling public relations for Oxford. Oxford officials
were not available to be interviewed, she said.
Once one of the region's premier managed care companies, Oxford ran into
trouble last year after falling months behind in paying its doctors and
hospitals. The company underestimated the cost of delivering care and has
said it expects to lose money in 1997.
Although Oxford has been quick to blame a new computer system for its
problems, state regulators and others have raised questions about the ability
of Oxford management to handle its tremendous growth.
The decision to replace William Sullivan, the 34-year-old marketing and
sales whiz who became chief executive in August, and the hiring of Koch
signal a fundamental shift of priorities for the company, said Bob Braddick,
a principal at William M. Mercer, an employee benefits advisory firm.
"Sales appear to be less a priority than fixing what is broke," he said.
Oxford also created an executive committee, composed of Stephen Wiggins,
its founder and chairman, and two outside board members, Fred Nazem, a
New York venture capitalist, and James Adamson, the chairman and chief
executive of a large restaurant company, Advantica Restaurant Group.
The committee will oversee the company's search for the two top officers
as well as regulatory matters, the expansion of its board of directors and
other issues.
"Steve founded and built one of the fastest-growing and successful
companies in the nation with a consumer-friendly vision based on quality and
choice," Nazem said in a statement. "We're looking to add a seasoned
executive who can build on Steve's vision while focusing on financial and
operational issues, allowing us to meet the demand for Oxford's products."
Industry consultants and analysts generally applauded the moves, including
the appointment of Koch, who is the chief operating officer for Jay Alix &
Associates, a turnaround firm based in Southfield, Mich. A former partner
at Ernst & Young, Koch was involved in overhauls at Ryder System and
LTV Steel.
But it is unclear how quickly Oxford will be able to fill its top slots. Although
there has been speculation in the past that the company was close to finding
a new chief financial officer, Oxford appears to be having difficulty finding
the right person. "This is a unique situation because of the extreme duress of
the company," said Marc Gouran, the group president for health care for the
Solomon-Page Group.
The Oxford spokeswoman would not comment on the status of the search
for a new chief financial officer.
Sullivan will remain as president and chief executive and is expected to stay
on as a senior manager. Andrew Cassidy, who resigned as chief financial
officer in November, shortly after Oxford made public the severity of its
problems, will remain with the company as a consultant. |
