HSI-FOUNDATION HEALTH: CONSUMERS, DOCS OPPOSE MERGER
Physicians and consumer groups in California "urged" stateThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
regulators to reject the merger of Foundation Health Corp. with
Woodland Hills, CA-based Health Systems International at a
hearing last Thursday. Consumer advocates testified at the state
Department of Corporations hearing that the merger "will reduce
competition and hurt services." LOS ANGELES DAILY NEWS reports
that the $3 billion deal has already won federal approval
(Adamson, 2/7).
NOT IN MY BACKYARD: The California Medical Association
(CMA) called for further investigation into the impact of the
deal (CMA release, 2/10). "Mergers by nature tend to reduce
competition and can put HMO enrollees at risk," said Dr. Jack
McCleary, president of the CMA (DAILY NEWS, 2/7). CMA officials
said that they do not oppose the entire merger, but are concerned
about its impact on the Sacramento market. McCleary asked the
Department of Corporations to "delay the proposed merger until
the Department has completed a full and adequate investigation of
the expected impact of the merger on health plan enrollees." He
said that there is "strongly suggestive evidence" that the merger
may be a problem for the Sacramento area because "the commercial
enrollee market share of the merged firm is expected to reach
problematic levels from the perspective of antitrust evaluation
(CMA release, 2/6).
NO NEED: Jay Gellert, Health Systems' president, told the
Department of Corporations that the merger would help cut costs
and that the savings would be reinvested to improve services and
technology. "A key rational for the merger was our ability to
reduce administrative costs while at the same time, increasing
the level of service we provide to our members" (DAILY NEWS,
2/7).