Blues tap Jews as new CEO Hospital executive termed 'medicine' for battered insurer

February 18, 1993|By Patricia Meisol | Patricia Meisol,Staff Writer

The directors of Blue Cross and Blue Shield of Maryland yesterday named William L. Jews, a hospital executive, to chart a new path for the embattled health insurer.

The selection of Mr. Jews, the 41-year-old president of Dimensions Health Corp., a hospital and nursing home company in Landover, as chief executive officer and president marks a new chapter in the company's history. Twenty years ago, the company dominated the health insurance market, but it now faces pressures from competitors and demands for better, cheaper service from subscribers and lawmakers.

In announcing the choice, Blues chairman Frank A. Gunther Jr. said the company had found someone with more than 15 years experience in the health care industry who has tackled finance, personnel and political issues with aplomb. He said the company was taking a "giant step forward. I just think this is the medicine we need," Mr. Gunther said.

The announcement caps a short but intense search to shore up the $1.5 billion company with new management seven months after state insurance commissioner John A. Donaho testified to Congress that Blue Cross and Blue Shield of Maryland was barely solvent and hiding its true financial picture. A subsequent investigation revealed poor management, excessive spending and more than $120 million in losses on subsidiaries.

Blue Cross is the largest health insurer in Maryland, insuring or administering insurance for 1.4 million subscribers. It expects to report record profits for the year ended 1992, continues to generate cash and is able to pay expected claims.

But state regulators have put the company on notice that it must follow industry rules this year in how its assets are valued, a change expected to trigger a dramatic decline in the insurer's net worth. The insurer is also under pressure to reduce its expenses and improve its claims service, now ranked lowest in the country.

Mr. Jews, who will join the company April 1, was introduced to employees at the insurer's Owings Mills headquarters yesterday. In a telephone interview, he said he would need time to sort out issues facing Blue Cross, such as how to improve its reserve level and whether to install a new management team, but that he expects the company to be a "major player for insurance market reform" and an active participant in the reforms now being considered by President Clinton's administration.

A 1974 graduate of Johns Hopkins University with a degree in social and behavioral sciences, Mr. Jews' career in hospital administration began as a planning official at the University of Maryland. For most of the 1980s he ran Lutheran Hospital and the Liberty Medical Center, the entity formed when Lutheran and Provident hospitals, one profitable and the other near bankrupt, were merged.

Mr. Jews will earn between $400,000 and $500,000, but the precise mix of base pay and bonus has not been established, Mr. Gunther said. The chairman said the package was average for a Blues plan similar to Maryland's.

The Blues' former executive, Carl J. Sardegna, earned a similar amount in base pay but with bonuses, took home nearly $900,000. In addition to compensation, Mr. Jews will receive basic health insurance coverage, an automobile allowance and membership in the Center Club, a downtown club frequented by business people.

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