PacifiCare Completes Merger With Health Plan of America

PacifiCare Health Systems Inc. said Tuesday it has completed its $91-million merger with Health Plan of America of Orange.

The two companies, which expect to be fully merged by next fall, have a total of 2,000 employees. The merger will make it one of the three largest health maintenance organizations in California, said Terry Hartshorn, president and chief executive officer of PacifiCare.

The merger, first announced in September, will give PacifiCare a long-sought foothold in Northern California, as well as operating licenses in counties that have 90% of the state’s population, Hartshorn said.

No layoffs are anticipated, and Health Plan President Lawrence Kugelman and other top executives of the privately held concern will remain with the new company, Hartshorn said.

PacifiCare financed the deal with $50 million in bank loans and $26 million in cash, he said. The remaining $15 million was financed by St. Joseph’s Health Systems of Orange, in the form of a convertible debenture, he said.

The two companies will have 850,000 members in California, Oklahoma, Oregon, Texas and Washington.