IHS plans to lay off 50-100 workers at Owings Mills Office operations being reorganized

September 23, 1995|By John Fairhall | John Fairhall,SUN STAFF

Fast-growing Integrated Health Services Inc. is laying off between 50 and 100 people at its Owings Mills headquarters this week as part of what company officials term a restructuring.

Senior Vice President Marc B. Levin said yesterday that the reduction does not reflect any trouble at the health services company, which specializes in low-cost alternatives to hospitals.

Integrated Health Services has reported record earnings and revenues for 18 consecutive quarters.

"The impetus . . . is to realign the corporate office operations" to decentralize decision-making and reflect Integrated's emphasis on "regionalized health-care networks," Mr. Levin said.

The company has had separate staffs for each product line, but now it will make one staff responsible for all product lines in each region, Mr. Levin said.

This "eliminates duplication of effort."

Company officials did not announce the layoffs, but confirmed them after some of the affected workers called The Sun.

Mr. Levin declined to specify the number of layoffs, but said they represent 8 percent of the corporate staff, which had been growing.

The company manages 38,000 employees in about 200 facilities nationwide.

It provides an array of services, mainly in specially outfitted nursing homes.

This is "the first time in the six years of the company that we've had a major reorganization like this," Mr. Levin said.

Kurt Funderburg, of Ferris, Baker Watts Inc. in Baltimore, said he wasn't surprised by the move.

"I have known in my discussions with them in the last several months they were considering some moves to reduce overhead and streamline operations," Mr. Funderburg said.

"I don't think this points up any weakness in their operations."

RB Integrated has had spectacular growth under Dr. [See IHS, 24C] Robert N. Elkins, its chairman and chief executive, and has become the leader in what the industry calls "subacute care."

Treating patients in less expensive nursing home settings appeals strongly to managed-care insurers.

But the company's stock has not reflected its earnings and revenue growth. It closed yesterday at $29.375, down from its 52-week high of $42.50 in February.

"The stock price has performed very poorly so far in '95, largely due to factors beyond the company's control," said Mr. Funderburg.

He referred to expected changes in the federal budgets of Medicare and Medicaid, important revenue sources for Integrated.

But Mr. Funderburg is optimistic about the company's prospects.

"Even the naysayers who have talked down IHS aren't really thinking the situation through, because even under the most pessimistic outlook, IHS will still be a very strong company," he said.

The company's strength is "providing care in the lowest-cost setting," he noted.

Integrated reported revenues of $278.4 million in the second quarter of this year, up 101 percent from a year ago. It earned $13.9 million before extraordinary items, an increase of 104 percent. Earnings per share before extraordinary items were up 35 percent, to 54 cents a share.

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