FHP’s Top Operating Executive Has Resigned
FHP International Inc., showing continued turmoil in its executive ranks, said Thursday that its top operating executive, R. Judd Jessup, has resigned from the health maintenance organization.
Jessup, the 47-year-old president of the company’s key HMO division, oversaw operations in nine states, including FHP’s problem-ridden California HMO.
The executive, who joined FHP in June 1994 as part of the company’s merger agreement with Concord-based TakeCare Inc., had wanted to become chief executive of the newly combined firm, say former employees, and had clashed with FHP’s chief executive, Westcott W. Price III.
One of Jessup’s chief tasks was managing FHP’s 936,000-member California HMO, which accounts for nearly half of its nationwide membership. The unit, plagued by poor profitability and slow growth, has changed operating executives twice in less than a year.
Indeed, the company generally fell far short of its goals to boost membership and profitability in the last year, said Kenneth S. Abramowitz, an analyst with Sanford C. Bernstein & Co. brokerage in New York.
“Whenever companies do not meet their plan, one of two things happens: Either the No. 2 or the No. 1 executive leaves--and usually the No. 2 executive leaves first,” Abramowitz said.
Among other problems, analysts said, enrollment in the California HMO’s plan for seniors has been flat in the last year--and even down in certain months--at a time when competitors’ enrollments are up.
“FHP has been struggling with its senior plan enrollment, and that was one of the anchors of the company,” said Dave Shove, an analyst at Fox-Pitt, Kelton brokerage in New York.
Ria Marie Carlson, an FHP spokeswoman, said Jessup decided recently that he didn’t want to renew his two-year executive contract, which expires June 18.
Carlson said Jessup and Price were unavailable for comment. She said the company plans to find a replacement for Jessup.
Jessup, formerly TakeCare’s president, was a protege of TakeCare’s former chairman Jack R. Anderson, now FHP’s chairman. Anderson, who replaced FHP’s ousted founder Dr. Robert Gumbiner last June, has masterminded the company’s massive corporate reorganization since then, former employees say.
Jessup had his hands more than full with managing the California HMO, let alone HMO operations across the country.
Last summer, when Christobel E. Selecky resigned as the California unit’s president, Jessup stepped in as the acting president and ran the subsidiary until last month when the company finally hired a permanent replacement.
Larry D. Gray, 45, who replaced Selecky, said he knew at the time he joined FHP that Jessup was considering other career options.
Gray, who worked for FHP in the early 1980s before leaving for a succession of jobs with other HMOS, said he expects to turn around the California HMO in part by offering new products for seniors and commercial customers. He declined to offer details.
He said he is working to improve retention of senior members by making sure that new members get proper service as soon as they enroll.
He said that, among other things, he is trying to make sure that new members establish a relationship with physicians easily, get appointments quickly and have medical records transferred promptly.
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Losing Ground
Southern California HMOs offering health plans for seniors had enrollment increases in May, except for one; FHP Inc.’s Senior Plan was down by 764.
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May Change from HMO enrollment previous month Aetna 55,332 253 Kaiser Foundation 165,259 2,246 PacifiCare 284,576 382 Health Net 50,090 720 FHP Inc. 202,736 -764
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Source: U.S. Health Care Finance Administration
