Aetna, which employed 37,000 people as of Sept. 30, said that 4,400 people would be laid off, while the other 1,600 jobs will be cut through attrition.
The Hartford company will take a fourth quarter charge of $125 million related to severance and associated facilities costs.
"These actions are necessitated by changes being made as we press forward with our turnaround plan, implement our new strategy, and reduce costs and improve efficiency," said chairman and chief executive John Rowe in a statement Thursday.
"With health membership levels in 2002 expected to decline materially as a result of implementing pricing that is more reflective of projected medical cost trends, as well as previously announced commercial HMO product withdrawals and Medicare market exits in selected markets, we must be sized to match the needs of our business," he said.
Last month, Aetna posted a third-quarter loss of $54.4 million. At the time, Rowe said that reductions in administrative expenses were meeting the company's expectations but warned that higher medical costs are "causing us to fall far short of our ultimate goals."
Aetna is the nation's leading provider of health care and related group benefits, serving 17.5 million health care members, 13.7 million dental members and 11.7 million group insurance customers, which includes life, disability and/or long-term care insurance.
That's down from its totals a year ago, when Aetna had more than 19 million health insurance customers, 14.5 million dental insurance customers and 11.4 million group insurance customers.
In December 2000, Aetna undertook a similar restructuring, announcing plans to slash 5,000 jobs as it withdrew from Medicare coverage and ended HMO offerings in some areas. That restructuring was unveiled a week after Aetna completed the sale of its financial services and international businesses to ING Group Inc.
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