NU Online News Service, April 29, 3:30 p.m. – Oxford Health Plans Inc., Trumbull, Conn., is bucking the usual trend and bringing its technology operations back in house.
The managed care company awarded Computer Sciences Corp., El Segundo, Calif., what was supposed to be a five-year, $270 million outsourcing contract in November 2000. Computer Sciences was going to handle Oxford’s data centers, help desk services, desktop systems and network operations.
But Oxford says it has now decided to end the arrangement.
“We believe that fully integrating the entire function will allow us to deploy technology solutions in a more flexible, timely and cost-effective manner,” Charles Berg, Oxford’s president, says in a statement announcing the move.
Oxford insists that it is making the move for business reasons, and that its computer systems are operating well.
The company ran into serious financial problems in 1997, in part because faulty accounting systems gave top executives an inaccurate picture of Oxford’s performance. The company has been working to overcome the effects of that crisis ever since.
Oxford predicts the latest transition will be a smooth one.
“CSC and Oxford have agreed to cooperate in an orderly transition of these functions back to Oxford,” Oxford says.
Oxford and Computer Sciences are still discussing the cost of the breakup, Oxford says.
“The financial issues being addressed include the repurchase or lease of assets held by CSC for use by Oxford and the obligation, if any, of Oxford to pay a termination fee,” Oxford says. “Oxford may experience a one-time charge in connection with these financial issues, but believes this charge, if any, would not exceed $10 million.”
Oxford always kept control of some technology functions, such as development of new applications. Even when Computer Sciences was in charge, it ran the Oxford systems using Oxford computers and Oxford employees in Oxford’s own offices.
Because Computer Sciences used Oxford’s computers, Oxford will be able to keep its systems on the same computers after the breakup, the company says.
Oxford says it expects to bring back a “significant number of Oxford employees who transferred to CSC.”