FOUNDATION HEALTH: COMPLETES FIRST OPTION TAKEOVER
California-based Foundation Health Systems Inc. "completedThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
its takeover this week of New Jersey-based First Option Health
Plan and Connecticut-based Physicians Health Services, Inc.," the
Bergen Record reports. The two companies will merge with
Connecticut-based M.D. Health Plan, which was purchased by
Foundation in 1995. Foundation hopes that the acquisitions will
enable it to become "a strong competitor in New Jersey, New York
and Connecticut." According to Foundation, the company will
"emphasize coverage that provides direct access to specialists,
without a primary-care physician as gatekeeper." Dr. Malik
Hasan, chair and CEO of Foundation, said, "Open-access products
are the most popular with consumers." Foundation Health Systems
initially invested $52 million in First Option, but recently
increased its share by $29 million (Washburn, 1/7). Foundation
acquired 500,000-member Physicians Health Services Inc. for $271
million (Klein, Asbury Park Press, 1/6). The three plans have a
combined membership of more than one million in the New York tri-
state area. Hasan said, "We are now positioned to be a
significant competitor in the New York area. PHS's outstanding
reputation, along with M.D.'s superior record of member
satisfaction and First Option's rapid growth in New Jersey give
us great confidence" (FHS release, 1/5).
MORE MERGERS
In other Foundation Health Systems news, the company
announced yesterday that it has received final regulatory
approval to merge its two California HMO subsidiaries, Foundation
Health, a California Health Plan, and Health Net, into one plan,
under the Health Net name. Health Net will now serve more than
2.1 million members in 50 California counties. Dr. Arthur
Southam, president and CEO of Health Net, said, "We are pleased
to receive the [Department of Corporations'] approval of the
merger of Foundation Health into Health Net. By combining the
resources of our two companies, we'll be able to serve virtually
every segment of the California marketplace with a full range of
health benefit products" (FHS release, 1/2).