WebMD Thursday reported that its board
has approved a restructuring plan that includes the layoffs of 1,100 jobs by the end of the year.
WebMD’s board said the plan should create a savings of $250 million by fourth quarter 2001. Phase I of the plan, which is already in effect, includes the consolidation of offices and data centers and reductions in marketing and promotional expenses.
The layoffs and consolidation are no surprise, stated Rachel Terrace, healthcare analyst at Jupiter Communications, a research and advisory service.
“WebMD has purchased a lot of companies over the past year and, until now, they have done very little with integration. There was a lot of job overlap and internal turmoil,” she said. “It is good to see that they are now making that a priority. Integration is important in getting the business in order as well as a key issue for the company’s investors.”
The workforce reduction stems from overlap resulting from WebMD’s
acquisition of Envoy, Medical Manager, CareInsite and OnHealth.
“While we are reducing expenses through the consolidation of operations
and the elimination of redundancy, the focus of our integration process is
to create a streamlined organization with a unified set of goals and
objectives,” said Marv Rich, president of WebMD.
WebMD provides connectivity and a suite of services to the healthcare
industry. The operation is an online service that facilitates information
exchange, communication and transactions between the consumer, physician and
As part of its efficiency strategy, the continued development of
administrative applications will reside at Envoy in Tennessee, clinical
applications of development will take place at Medical Manager Health
Services in Florida; and Internet-based content, applications and services
development will reside in California.
“An important step in creating an efficient organization is aligning our
development resources with proven domain expertise,” Rich noted. “As a
result of having the right set of combined assets and management team in
place, we believe the we will be able to offer and unparalleled set of
value-added services for physicians, payers and other healthcare
organizations and consumers.”
To make the integration plan a success, the company anticipates taking a
pre-tax restructuring charge of between $35 million and $45 million in the
quarter ended September 30, 2000.
As a result of the execution of this phase, the company expects to incur
additional costs related to moving and relocations.
Additionally the company is evaluating existing relationships as well as
divesting its plastic and filtration technologies subsidiaries.