HEALTH CARE : FHP Forms Network of 38 HMOs, Signs Xerox as Customer

Hoping to expand its marketing nationwide, FHP Health Care, a health maintenance organization in Fountain Valley, said it has formed a network of 38 regional HMOs to provide medical benefits to employees of large corporations.

The first customer to sign up for FHP’s network is Xerox Corp., which will offer the plan to approximately 35,000 employees in 25 states this fall, said James Smith, FHP’s associate vice president of national sales.

FHP developed the network after Xerox last year selected FHP as one of six HMOs to oversee a consolidation of health care plans for Xerox employees.

The Fountain Valley HMO is providing centralized billing and rating as well as utilization review and quality control for HMOs in the network. For Xerox and future customers, that means eliminating the need to deal separately with each HMO.

Besides a $20,000 monthly fee for operating the network, FHP officials project the company will receive about $3 million a year in revenue for providing medical care.

FHP alone provides prepaid medical plans in California, Utah, Arizona, New Mexico and Guam. By putting together a network of existing HMOs, Smith said, FHP will be able to offer medical care on a national basis without the great expense of buying or starting up new HMO plans in other parts of the country.

“Xerox is our first client. But in the future we would hope to sign up many other large employers,” Smith said.