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Case's Revolution Health to Lay Off 60 Workers in Restructuring

By Thomas Heath
Washington Post Staff Writer
Wednesday, October 24, 2007

Revolution Health Group will lay off 60 employees starting this week as part of a broad restructuring at the health-care business launched two years ago by AOL founder Steve Case, the company said yesterday.

The layoffs will occur at Revolution Health Networks, one of four divisions at the privately held District firm, according to spokesman Brad Burns. A note was distributed to employees last night, Burns said.

Revolution Health was founded in 2005 with a mission to make health care more consumer friendly. Case has made a big bet on the business, investing tens of millions of his own fortune and hiring hundreds of employees in anticipation of rapid growth.

The reorganization and layoffs are meant to reduce costs to match lower-than-expected revenue, according to sources close to the company who spoke on condition of anonymity because they were not designated to speak for the firm. The workforce of the affected division will drop to about 180 from 240, Burns said.

In a note to employees last night, Revolution Health Networks president Tim Davenport said, "there is much to be proud of at Revolution Health and the overall growth of the company is impressive. Even so, I know that this is of little solace for those who will be leaving us this week."

Revolution Health, located on Connecticut Avenue NW in downtown Washington, seeks to make health-care information and services more accessible to consumers. Case was inspired to launch the business after his brother's battle with brain cancer. Case has received backing from several bold-faced names, including former Fortune 500 chief executives Franklin D. Raines and Carly Fiorina, and former secretary of state Colin Powell.

Revolution Health bills itself as the third-most-visited health-information Web site, with about 9 million unique visitors and 100 million page views per month, according to company figures. One of its main competitors is WebMd, an online health portal.

About two weeks ago, Revolution Health was reorganized into four units: Revolution Health Networks, an online clearinghouse for medical information; CarePages, an online community for the seriously ill and their loved ones; Extend Health, an insurance Web site for businesses and individuals; and RediClinic, a chain of health-care clinics in retail stores.

As part of the restructuring, Case hired Davenport, a veteran software executive, as the new president of Revolution Health Networks. Case will remain chief executive of Revolution Health Group.

Davenport is overseeing the transition from start-up to operating company, which includes reducing staff in technology and programming while ramping up in advertising, sponsorship and sales, according to the company. Burns said Revolution Health will continue to grow overall and add some positions by the end of the year.

Revolution Health is part of Revolution LLC, a holding company Case founded after leaving AOL. Through Revolution, Case has invested $500 million into an eclectic array of ventures, including high-end Exclusive Resorts, Flexcar car-sharing service, and, most recently, an online financial services company called Revolution Money, which he announced last month with AOL vice chairman emeritus Ted Leonsis.

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