PACIFICARE/FHP: STATE REGULATORS APPROVE MERGER
California regulators approved Friday PacifiCare HealthThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
System's $2.2 billion purchase of FHP International Corp., LOS
ANGELES TIMES reports. The deal would form "one of the largest
managed care companies in the nation with expected revenue of $10
billion a year." TIMES reports that "within hours" of the deal's
approval, officials from both companies announced that 400 jobs
across the country "would be eliminated," with "overall" layoffs
expected to affect 900 employees nationwide (Marsh, 2/15).
AP/SAN FRANCISCO CHRONICLE reports that 928,000 of the new
system's 2.9 million members would be Medicare HMO patients, and
that the new company would dominate "a huge section of the market
in San Diego, Orange and Los Angeles counties" (2/15).
HURDLES: TIMES reports that "PacifiCare still faces another
regulatory hurdle before it can merge the two plans." In its
approval, the state Department of Corporations stipulated that
PacifiCare must allow patients to keep their doctors and remain
on prescription plans. PacifiCare CEO Alan Hoops "said he hadn't
expected such conditions to be required" (2/15). However, in a
statement, the company said, "clearly we agree with the
department that access to quality and affordable care is critical
to this state. It merits careful consideration and oversight,
not just with PacifiCare, but all HMOs in California (PacifiCare
REAX: TIMES reports that consumer and physician groups
"vowed to support legislation to safeguard patients as such
mergers sweep across the HMO industry," after voicing opposition
to the merger at public hearings last month (see AHL 1/31).
State Sen. Herschel Rosenthal (D) "said he'll try to persuade the
agency to make sure consumer interests are protected as such
mergers proceed." TIMES reports that Rosenthal "plans to
introduce legislation that would shift the state's regulatory
oversight of the HMO industry to the Department of Consumer
Affairs." Dr. Juan Cobo, head of the Orange County affiliate of
the California Medical Association, said, "I don't believe the
Department of Corporations is set up -- or has the people on
board -- who can adequately oversee" the HMO industry (2/15).