FHP May Buy San Francisco Care Provider : Health: Acquisition of Bridgeway would give the Fountain Valley company a foothold in Northern California.
FHP International Corp., seeking to gain a foothold in Northern California, said Wednesday that it is discussing a possible acquisition of a small San Francisco-based health maintenance organization.
FHP, with more than 620,000 members, operates HMOs in Southern California, Utah, Arizona, New Mexico and Guam. It has no facilities or contract physicians in Northern California, and the purchase of Bridgeway Plan for Health could help it attract more large corporate clients, an FHP official said.
“It’s clear that many major employers are now consolidating their health-care carriers,” said Pat Vitacolonna, executive vice president and chief operating officer of FHP. “We’re anxious to be able to provide statewide coverage for some of our major accounts.”
Bridgeway is a relatively small HMO, with 63,000 members using 53 affiliate hospitals in 12 counties. The company began in 1975 as a nonprofit HMO at Children’s Hospital of San Francisco. In 1988, it became a for-profit company. It is owned by Northern California Health Center, which also owns Children’s Hospital.
“It’s not a very large plant, but it’s of very high quality,” Vitacolonna said. “It’s connected with the best hospitals up there.”
FHP intends to keep Bridgeway’s management team in place, Vitacolonna said.
The Federal Trade Commission on Wednesday approved a merger of Children’s Hospital with Pacific Presbyterian Medical Center in San Francisco, giving Bridgeway--and FHP, if the deal goes through--access to another Bay Area hospital.
The two companies did not disclose financial details, and Vitacolonna declined to discuss what Bridgeway might be worth. But Robert E. Edmondson, Bridgeway’s president and chief executive, said the company is worth “more than $25 million.”
“We’ve grown at 10% to 15% per annum, and we’ve been profitable all along,” Edmondson said. “This is not coming about because we’re in a weak position but because we’re in a strong position.”
If the acquisition is completed, Bridgeway could serve statewide clients, Edmondson said. The company also needs the financial resources of a larger company for future expansion.
“FHP certainly brings a lot of capital and know-how,” he said.
The agreement the two companies signed calls for a 45- to 60-day “due diligence” period during which FHP and Bridgeway can review each other’s operations and financial statements and try to reach a final agreement.
Edmondson said Bridgeway has discussed a merger with other companies, but FHP is its first choice.
“Obviously, we expect it to pan out,” Edmondson said. “But if it doesn’t, we have other options.”
