Magellan to close center

130 jobs cut in Columbia

loss of WellPoint contract blamed

November 18, 2006|By Jamie Smith Hopkins | Jamie Smith Hopkins,Sun reporter

Magellan Health Services Inc., a specialty managed health care organization that was once headquartered locally, said yesterday that it will close its Columbia call center, cutting 130 jobs.

A lost contract is to blame. WellPoint Inc., an insurer and significant client, opted to terminate next March a behavioral health services contract for 2.4 million Americans that was not slated to expire until the end of 2007. It plans to manage the work itself.

Nearly 400 Magellan jobs will remain in Columbia, mostly corporate staff. The work that was done at the call center - customer service and care management - will be transferred to centers in Cincinnati and St. Louis.

The company would not disclose the employees' salaries but said the customer service associates answer phones, while the care managers are professionals with clinical backgrounds, some of whom have master's degrees.

"We knew ... we were going to need to close a care-management center because we no longer have sufficient membership when that care-management contract goes away," said Erin Somers, a spokeswoman for Magellan.

The nation's largest manager of mental health and substance abuse benefits, Magellan recently branched out into two additional fields: specialty pharmaceutical and radiology-benefits management. It contracts with HMOs, employers, unions and government agencies to provide coverage to just over 60 million Americans.

Magellan moved its headquarters three years ago from Columbia to Connecticut, home of Chief Executive Officer Steven J. Shulman, who came on board to help it deal with heavy debt.

Somers said Magellan will try to place affected Columbia employees in other company jobs. The Cincinnati center, for instance, will likely be adding staff next year to handle new contracts.

That center managed the WellPoint contract, which was worth $48.5 million in the first six months of this year alone. But Magellan found it was more cost-effective to keep the Cincinnati center operating and instead close its Columbia operation, which leases a building in the Columbia Gateway office park next door to where the local corporate staff is housed.

"Our office space here in Maryland offers greater flexibility for termination, which means we can incur lower real estate costs," Somers said. She added: "We are committed to continuing our presence in the state of Maryland. We have a number of functions ... here in the corporate building that are essential."

The affected employees were notified Thursday night, she said.

It's a blow for the workers but a blip for affluent Howard County, which has more than 140,000 jobs. At last count, the county's unemployment rate was 2.7 percent - far below the nation's 4.4 percent rate. The most recent statistics from the state show the county adding nearly 5,800 jobs in the 12 months ending in the first quarter of this year, "the largest jump we have seen in the last five years," said Richard W. Story, chief executive officer of the county's economic development authority.

Still, Magellan's is the third significant layoff announcement in less than a month in Howard County. It comes on the heels of job cuts at Owens Corning, a building-materials manufacturer that employs 100 in Jessup, and Atlantic Credit & Finance, a financial services company that employs 80 in Columbia. Both are closing their local operations by the end of the year.

"I'm very confident that each of these sets of skills will be assimilated back into the economy pretty quickly," Story said. "The economy is very robust. We had a good year last year, and it looks like 2006 will be an exceptional year."

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