PACIFICARE/FHP MERGER: STATE HOLDS ‘UNPRECEDENTED’ HEARINGS

      "Consumers and physicians urged state regulators [Wednesday]
 to block the takeover of FHP International by PacifiCare Health
 Systems," AP/San Diego UNION-TRIBUNE reports (Reckard, 1/30). 
 About 100 consumer advocates, medical professionals and patients
 "flocked to Irvine City Hall for the first day of unprecedented
 state hearings" of the proposed $2.1 billion deal.  Supporters
 "outlined the proposal's merits, while critics resurrected a
 variety of complaints about PacifiCare's record on delivering
 quality care to its members," LOS ANGELES TIMES reports
 (Marsh/Fulmer, 1/30).    
      PROS AND CONS:  Jamie Court, director of Consumers for
 Quality Care, said that the deal "would lessen competition, offer
 fewer choices and services for consumers and could lead to price
 fixing."  He added that PacifiCare "routinely places profits
 ahead of patients' needs and doctors' preferences" (UNION-
 TRIBUNE, 1/30).  TIMES reports that both the Orange County
 Medical Association and the California Nurses Association oppose
 the merger.  Paul Mack, a spokesperson for the nurses
 association, said, "Do not grant mega-HMO status to these
 companies that clearly need close monitoring and procedural
 checks."  However, "PacifiCare and FHP executives said the
 combined company would provide consumers access to an expanded
 number of hospitals and doctors across the state and enable FHP
 patients to keep their doctors," TIMES reports.  PacifiCare
 officials also raised the possibility that if the merger is not
 approved, out-of-state HMOs could acquire both plans, costing the
 state jobs.  
      TWO DOWN, ONE TO GO:  TIMES reports that the merger has
 already received approval from federal regulators and state
 Attorney General Daniel Lungren (R).  However, state Department
 of Corporations Commissioner Keith Bishop, who still must approve
 the deal, "is under increasing pressure from legislators to prove
 he's a strong regulator of HMOs."  In addition, state Sen.
 Herschel Rosenthal (D) is planning to file a bill to block the
 merger "until Bishop can make sure whether the deal is in the
 consumer interest" (1/30).