Job cuts at Amerigroup affect Virginia Beach workers

VIRGINIA BEACH

Amerigroup Corp., citing increased pressure to contain costs, said Monday that it eliminated slightly more than 80 jobs, including 40 in Virginia Beach.

"We thought this was the appropriate action to take in light of the current business environment," said Kent Jenkins Jr., spokesman for the Virginia Beach-based company.

Amerigroup, which provides managed care for beneficiaries of Medicaid and other government-funded health care programs, also cut 165 positions that were already vacant, Jenkins said.

Earlier this month, Amerigroup suspended its guidance to investors for expected 2008 earnings, blaming the higher-than-expected cost of providing private-duty nursing to beneficiaries of its middle Tennessee health plan. The company said it was negotiating with the state for a retroactive rate increase to cover the additional expense.

In March, Amerigroup scaled back its earnings guidance for the year, saying that the drop in short-term interest rates would reduce its investment income.

The job cuts in Virginia Beach included posts held by William Mellon, a senior vice president for corporate communications who joined Amerigroup late last year after working for Northwest Airlines, and Linda Pharr, a vice president of marketing.

Earlier this month, Amerigroup disclosed a separation agreement with William Keena, its executive vice president for support operations. He resigned from his post on May 23 and will leave the company July 1, according to an Amerigroup filing with the Securities and Exchange Commission. Keena's departure was unrelated to the job cutbacks, Jenkins said.

The reductions come in the wake of recent discussions with Virginia Beach about plans for a third office building at Amerigroup's service-center complex near Regent University. The job cuts and attention to controlling expenses "certainly could have an impact on the timing" for the proposed building, Jenkins said.

Amerigroup also is in the process of winding down operations at its Washington, D.C., health plan and withdrawing from the Memphis, Tenn., market, where it bought a health care plan last year with the intent of expanding to that market.

Some employees at its Washington plan have moved to Amerigroup plans in Maryland and Virginia, but about 50 stand to lose their jobs when the company's operations in Washington close Monday, Jenkins said.

In the Memphis area, 160 employees could lose their jobs later this year when Amerigroup ends its health care plan there. However, "two new health plans in west Tennessee are ramping up and looking for experienced employees," providing opportunities for displaced Amerigroup employees, he said.

Amerigroup's shares price fell 74 cents Monday to close at $21.64 after hitting a 52-week low of $21.15 during the day.

Tom Shean, (757) 446-2379, tom.shean@pilotonline.com