Minneapolis HMO Adding to Acquisition List : Health: United HealthCare to pay $520 million for GenCare, largest plan in St. Louis.

United HealthCare Corp., a fast-growing operator of health maintenance organizations, announced Monday that it has agreed to buy GenCare Health Systems Inc. for $520 million.

The cash purchase would give Minneapolis-based United control of the largest health plan in St. Louis, with 365,000 customers in HMOs and other managed-care health and dental plans.

United, founded in 1974, has grown rapidly in recent years through purchases of health care programs such as HMOs. It has also expanded by signing up thousands of new customers, resulting in an enrollment growth rate of about 20% a year.

The company’s expansion illustrates the rapid conversion of health care in the United States from traditional health insurance programs, which pay for each service separately, to managed care, in which patients pay a flat fee and are covered for a variety of health needs, often at a lower cost.

General American Insurance Co., which owns 72% of GenCare shares, has agreed to the buyout.

United now serves more than 23 million people around the country, including 128,000 members of Physicians Health Plan of Greater St. Louis.

Purchases this year include Complete Health Services, with 270,000 HMO enrollees in seven Southern states, and Ramsay-HMO Inc., with 177,000 HMO enrollees in Florida.

United earned $196.4 million last year, a 71% increase from 1992, and will have plenty of cash to fund its acquisitions. In May, it agreed to sell Diversified Pharmaceutical Services Inc., its prescription benefits management subsidiary, to British-based drug maker SmithKline Beecham for $2.3 billion.

Terms of Monday’s agreement call for United HealthCare to pay $47.50 a share for each of GenCare’s shares. That’s a 20% premium over GenCare’s closing price of $39.50 on the Nasdaq stock market Friday. GenCare’s shares rose $6.50 Monday to $46.