Denver Battered by a lawsuit, financial woes and the resignation of two top officers, Coram Healthcare is eliminating positions, consolidating departments and terminating nonessential consulting agreements, as well as adding high-level personnel, officials said.

The home infusion company hopes to save $15 million annually through its year-long cost-cutting efforts. "This market will be dominated by low-cost, efficient providers of high-quality services," said Daniel Crowley, chairman, president and chief executive officer. "We believe we can compete more effectively and have a positive margin by reducing our costs. To move this process forward, we believe that the repositioning is critical."

Crowley also said the company would renew its focus on home infusion therapy. He named Michael Saracco, Eric Hill and Linda McBride as vice presidents of nutrition, hemophilia and transplant-related infusion therapies, respectively. He said they will be charged with growing those key therapies and changing the mix of Coram's infusion business.

The restructuring comes as Coram grapples with a variety of troubles that seemingly stem from its breach-of-contract lawsuit with Hartford, Conn.-based Aetna U.S. Healthcare. In July, Coram filed a $50 million lawsuit against Aetna, claiming the insurer misrepresented and understated the utilization of home care services by its enrollees under a service agreement entered into in April 1998. Aetna responded by suing Coram for breach of contract. In November, a U.S. District Court dismissed Coram's charges of fraud, negligent misrepresentation and mistake claims against Aetna. The breach-of-contract suit remains active; a court date has been set for April.

In fallout from the dispute with Aetna, Coram's Resource Network subsidiaries recently filed for Chapter 11 bankruptcy protection. Called R-Net, they oversaw a network of contract providers for managed care organizations. Company officials said the losses sustained by R-Net could not be overcome "without a resolution of the pending litigation."

The company also laid off 113 employees in Whippany, N.J., as a result of the legal dispute with Aetna and expects to take charges of between $25 million and $30 million in the fourth quarter of fiscal 1999, officials said. Company officials also warned in January that Coram could be delisted from the New York Stock Exchange because it did not meet minimum requirements, including a per-share stock price of $1.

In addition, the company lost its chief executive officer, Richard Smith, in September and its chief financial officer, Wendy Simpson, in November.

Crowley, however, said Coram is on the road to recovery. He noted that Allen Marabito has joined it as executive vice president, overseeing legal matters, corporate compliance, human resources, contracting and purchasing. He will be part of a turnaround management team.

"We believe we're on the path to an effective turnaround," said Crowley. "We are moving quickly to identify challenges, focus on key therapies, cut costs and install strong management. There remain, however, significant challenges facing the company and uncertainties that could materially affect our success." -S.H.