PacifiCare Will Enter Lucrative N. Calif. Market : Health care: The Cypress company’s president says it needs to cover the whole state to remain competitive.

Anxious to widen its operations north of the Los Angeles basin, PacifiCare Health Systems Inc. announced Monday that it has received state approval to expand its health maintenance organization into Northern California through a network of providers.

In announcing the expansion, PacifiCare said it has not given up its quest to acquire another HMO to further expand in Northern California, which with 26 HMOs is considered one of the most competitive, yet lucrative markets in the nation.

PacifiCare, one of the country’s fastest-growing HMOs, has assembled a system of providers in Alameda, Contra Costa and Santa Clara counties. The network includes 16 hospitals, eight independent physician associations and one medical group, representing about 1,600 doctors, according to Susan Dunn, a PacifiCare spokeswoman.

The affiliation comes after the Cypress company’s failed attempts in 1990 to acquire HEALS Health Plan, an Oakland-based HMO, and Maxicare Health Plans Inc. of Los Angeles.

“One thing that’s pushing us to go there is that some large employers in the state are reducing administrative costs and they’re consolidating the number of health insurance choices to a single HMO,” said Terry Hartshorn, PacifiCare’s president and chief executive. The company said it needed to provide health services statewide to remain competitive.

“If we don’t offer it there, we know they’ll find somebody else,” he said. PacifiCare’s clients include major retailers Sears Roebuck & Co. and J.C. Penney Co. Inc., and computer giant International Business Machines.

Hartshorn said his company will invest between $6 million and $8 million and hire up to 40 administrative and marketing employees in Northern California in the next two years. He expects to enroll 15,000 to 20,000 new members.

PacifiCare currently serves 710,000 members in California, Oklahoma, Oregon and parts of Texas. This is up 6% from 670,000 a year ago.

Harold (Hal) Hylton, formerly vice president of marketing and development, was selected president of PacifiCare’s Northern California operation, which will be operated as a separate unit of the company. Hylton will decide later in the year on a permanent location for the unit’s headquarters, Hartshorn said.