Laid-off Workers Protest EmblemHealth IT Outsourcing
By Christine Kern, contributing writer
As hospitals work to control costs, outsourcing can result in tensions.
EmblemHealth issued 250 layoff notices to staff members and will instead outsource its tech work to services firm Cognizant, according to Modern Healthcare. The layoffs represent approximately 7.5 percent of the company’s total workforce of 3,300 employees and has prompted a protest by about 25 of the company's IT workers outside the insurer's offices in New York, shouting, “Protect U.S. jobs,” and “It's our jobs now, your jobs next,” the publication reported.
Affected IT employees at EmblemHealth had organized in an effort to stop the looming layoffs but CEO Karen Ignagni said outsourcing the work was part of "crucial" modernization for Emblem's future.
Ignagni, a former Washington D.C. lobbyist and head of America’s Health Insurance Plans (AHIP), has been struggling to complete a financial turnaround at. According to Crain’s, Emblem’s insurers, GHI and HIP, had a combined net loss of $113 million last year, an improvement over the combined $485.8 million net loss recorded in 2014.
Crain’s reported EmblemHealth is hiring TriZetto, a Cognizant subsidiary, in an effort to cut costs by automating processes and upgrading technology. Many of the affected employees are being asked to accept employment from Cognizant. “This step will allow us to create a stronger company that will deliver innovative products, continue our leadership in value-based care, improve service to our members, and provide us with greater agility in this ever-changing environment,” explained an Emblem spokeswoman.
Ignagni explained her decision in a video to employees posted on YouTube by attorney Sara Blackwell. The Florida attorney, who is representing displaced Disney IT workers, has been helping the EmblemHealth IT employees organize. In the video, Ignagni said EmblemHealth has “come to realize that building our own technology would require hundreds of millions of dollars and require time that we didn't have.”
Ignagni said Cognizant and the technology of its subsidiary, TriZetto Corp., a healthcare consulting and software firm, are already widely used in the health insurance industry. “This move to a modernized platform will no longer require the level of staffing we now have to maintain the old system,” Ignagni said. “Several hundred IT and operations positions will be eliminated.”
The debate over moving IT jobs offshore and companies using H-1B visas has grown increasingly heated over the last year. Last summer, Southern California Edison workers complained that more than 500 of them were laid off so the company could bring in cheaper H-1B workers from other countries. Former Disney workers say the same thing happened to them when 250 employees were laid off in late 2014 and replaced by workers from an outsourcing company in India.
Companies continue to show strong interest for bringing in foreign workers. The agency that handles H1-B requests recently said it hit its cap of 85,000 petitions in just five days and will award visas using a lottery system.