PacifiCare Acquires Life Insurance Firm

Adopting one of the more popular expansion strategies for prepaid health plans, PacifiCare Health Systems Inc. of Cypress announced Thursday that it has acquired an insurance company to round out its medical benefits offerings.

Terms of PacifiCare’s purchase of Columbia General Life Insurance Co. of Indiana were not revealed.

Terry Hartshorn, PacifiCare’s president and chief executive, said the acquisition was an important ingredient in the 7-year-old company’s efforts to broaden its operations beyond its 150,000-member health maintenance organization.

According to Hartshorn, businesses are increasingly seeking to channel their employee health coverage through a single firm that provides a complete range of health benefits programs, from an HMO all the way to a traditional insurance plan. With the acquisition of Columbia General, PacifiCare now has a full range of services.

PacifiCare’s strategy is hardly unique. According to Randall Huyser, a health care analyst with Montgomery Securities in San Francisco, diversification into other health benefits is currently one of the most popular moves among HMO providers.

“Lots of HMO providers are getting insurance companies in order to offer employers a full spectrum of health benefits,” Huyser said. “It’s difficult these days to grow in the health care business so this is what the companies are turning to.”

According to PacifiCare, Columbia General is a privately held company that is licensed to sell insurance in 24 states. For 1985, it reported selling only about $4.8 million worth of premiums. Huyser said bringing the company up to full operation would not be difficult.

When the purchase is complete, Columbia General will be a wholly owned subsidiary of PacifiCare Health Systems. The purchase, which is expected to be completed by May 1, requires approval from the Indiana Insurance Commissioner.