PRUDENTIAL BANDAGES LOSSES; HEALTH CARE DIVISION STILL LOSING MILLIONS, BUT GAP NARROWING.Byline: Ben Sullivan Daily News Staff Writer Prudential Prudential is the name of two different companies and buildings named after them: Companies:
In light of a possible sale of the unit, rumored since last fall, analysts say The Prudential Insurance Co. of America must spruce up spruce up Verb [sprucing, spruced] to make neat and smart Verb 1. spruce up - make neat, smart, or trim; "Spruce up your house for Spring"; "titivate the child" its 8 million-member health care division. If Prudential - which operates its western division from Woodland Hills - ultimately keeps the money-losing business, making it financially sound is even more important. But stemming and reversing current losses is proving an enormous task, analysts and company management say. ``With their sheer size you'd have to think there's something salvageable sal·vage n. 1. a. The rescue of a ship, its crew, or its cargo from fire or shipwreck. b. The ship, crew, or cargo so rescued. c. Compensation given to those who voluntarily aid in such a rescue. ,'' said ABN-Amro analyst Peter Costa This article is about the professional poker player. For the former child actor, see Peter Costa (actor). Peter "The Poet" Costa (born January 17 1956 in Cyprus) to Greek Cypriot parents is a British professional poker player based in Las Vegas, , ``but clearly this is a troubled company and has a long way to go to turn itself around.'' The company has been taking steps to return to profitability from losses of nearly $200 million in 1996 on sales of $6 billion. In the last six months, Prudential has hired new management, cut staff and is wrestling wrestling, sport in which two unarmed opponents grapple with one another. The object is to secure a fall, i.e., cause the opponent to lose balance and fall to the floor, and ultimately to pin the supine opponent's shoulders to the floor, through the use of body to bring escalating medical costs under control, said Cora Tellez, president of Prudential HealthCare's western operations. Tellez was brought in last year to impose financial discipline on the company's California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , Colorado, Utah and Arizona operations. While a sale has been a possibility from the start, Tellez said, long-term viability is the goal of the changes. ``It (the sale) was an option that was described to me, but it was emphasized that it was only one of several,'' she said. Still, ``we wanted to demonstrate (to potential buyers) that we were committed to a turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. .'' Tellez said one of her first tasks - after cutting 12 percent of her work force, or nearly 300 of 2,500 jobs - was to assess the division's revenue stream. Based on that and similar assessments throughout the country, she said, Prudential has increased its marketing to small- and mid-sized employers. ``I noticed the portfolio was geared to large, multi-state employers. If one or two were to leave us, we'd be in world of hurt,'' she said. The danger of relying on big-win contracts was made clear on a national level in late 1996 when Prudential lost a contract to sell insurance to the 30 million members of the American Association of Retired Persons American Association of Retired Persons: see AARP. , one of the largest organizations in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The contract had accounted for roughly 30 percent of Prudential's health care revenues and the company is still struggling to make up the difference. Tellez, for her part, said she's added 17,000 members from small- and mid-sized employers, for a gain of about 3 percent of Prudential's total western membership. Beyond new marketing, Tellez said, the company has sought to leverage its heft nationally to cut drug cost increases through group purchasing, and to lower the capitation CAPITATION. A poll tax; an imposition which is yearly laid on each person according to his estate and ability. 2. The Constitution of the United States provides that "no capitation, or other direct tax, shall be laid, unless in proportion to the census, or rates it pays to physician groups to care for members. Prudential signed a deal with SmithKline-Beecham last month that will let Prudential physicians run lab tests at a discount. There are signs the turnaround campaign is working. Last month Prudential reported to the California Department of Corporations a 1997 loss of $5 million for the western division. While far from profitable, the results marked an improvement over 1996 figures when it registered a $40 million loss. Whether such narrowing of losses and membership gains will be enough to attract a bidder remains to be seen. Analysts believe both Woodland Hills-based WellPoint Health Networks Inc. and Louisville, Ky.-based Humana Inc. have held talks with Prudential over a purchase. But industry trackers say WellPoint, at least, appears to have bowed out of a buy, put off by a reported asking price of more than $1 billion. And mere rumors For other uses, see Rumor (disambiguation). Rumors is a farcical play by Neil Simon. At its start, several affluent couples gather in the posh suburban residence of a couple for a dinner party celebrating their tenth anniversary. that WellPoint was considering a purchase pushed that company's share price down last fall, ABN-Amro's Costa said. ``Let's put it this way: If they bought Prudential it might be attractive for the long term, but it would be very unattractive for short-term earnings,'' he said. Humana is keeping mum. Company spokesman John Drayna said the firm would neither confirm nor deny rumors it is looking at Prudential. Tellez said that if no sale comes about, the division is at least poised to make money soon. As such, there is no rush to unload To remove a program from memory or take a tape or disk out of its drive. the unit, she said. ``I see very good signs across the country,'' she said. ``Even if there weren't a sale, we've got to keep doing what we're doing. And if there is one, an acquiring company isn't going to want a dog.'' CAPTION(S): Photo, Chart PHOTO (Color) Prudential HealthCare's western division is based on Canoga Avenue in Woodland Hills. There are signs a turnaround campaign is working. Michael Owen
CHART: Prudential growth Source: Prudential Health Care/Daily News |
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