A case study in corporate resuscitation

Managed-care executive Norman C. Payson, M.D., described “The Rise, Collapse and Resurrection of Oxford Health Plans Inc.” for graduates of the Yale Management Course for Physicians in April. The Connecticut-based health insurer “is off the ventilator, it is out of the ICU, but it is still an inpatient,” said Payson, who was brought in to revive the ailing company as its CEO last year.

He was a fitting choice for the graduation ceremony, which marked the end of a course designed to impart management skills so doctors may better cope with medicine’s new regulatory and financial environment. Payson started his career as a physician, became CEO of a 120-physician group practice, then headed a managed care company before taking over as CEO of Oxford. The company became the darling of Wall Street in the early 1990s as it offered customers a choice of insurance plans and sought affiliations with top doctors and hospitals. After a series of poor business decisions, its quarterly profits of $34 million, Payson said, fell to quarterly losses of $45 million a year later. Its stock plummeted, investors sued and regulators intervened. To survive, the company jettisoned its management, secured new investments and pulled out of unprofitable markets. Now, Payson said, Oxford’s recovery is a work in progress. “Hopefully,” he said, “the patient will be able to go home soon.”