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Blue Cross Blue Shield of Massachusetts Announces Action to Reduce Administrative Spending

Steps include a freeze on salaries

BOSTON — February 10, 2008 — Blue Cross Blue Shield of Massachusetts (BCBSMA) today announced a series of actions that will save millions of dollars in administrative expenses.

BCBSMA's Chief Financial Officer Allen Maltz said "like any well-run business in the current economic environment, we are taking action to reduce spending. We are not immune from the worst economic downturn since the Great Depression. Specifically, the ongoing reductions in the labor force that we read about in the news every day are likely to have an adverse affect on our membership levels. In addition, the ongoing turmoil in the financial markets will continue to negatively impact our investment income. The action we're announcing today is designed to maintain our financial strength and market leading position."

Among the actions announced today:

  • No payments in 2009 under the long-term incentive plan for senior executives
  • A 20% reduction in payments under the incentive plan that applies to all associates
  • No pay increases in 2009 for all BCBSMA associates
  • A hiring freeze except for positions with specific skill set requirements

The combined effects of these actions will reduce the average 2009 cash compensation for BCBSMA's senior management team by approximately 30% and approximately 50% for the CEO over 2008 levels.

Maltz said these new actions are in addition to a comprehensive plan announced last fall designed to lower BCBSMA's administrative costs over the next 18 to 24 months. The plan includes reducing the size of BCBSMA's workforce, restructuring the company for greater efficiency, increasing the number of employees who work full-time from home, and adopting and deploying advanced technology and information systems. Maltz added that the company is also working aggressively to lower medical costs which comprise nearly 90 percent of BCBSMA's premiums.


Blue Cross Blue Shield of Massachusetts ( ) was founded more than 70 years ago by a group of community-minded business leaders. Today, headquartered in Boston, BCBSMA provides coverage to more than 3 million members, 2.5 million in Massachusetts. BCBSMA believes in rewarding doctors and hospitals for delivering safe and effective care, and in empowering patients to take more responsibility, become educated health care consumers and become stronger partners with their doctors. Blue Cross Blue Shield of Massachusetts is an independent licensee of the Blue Cross Blue Shield Association.


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