Health Systems Taps Chief of Rival to Lead Health Net

Continuing to revamp its senior management, Health Systems International has named a top executive from a rival managed-care company to head Health Net, its main subsidiary and the state’s second-largest HMO.

Arthur M. Southam, president and chief executive of CareAmerica Health Plans, was named president of Health Net, a health maintenance organization with 1.3 million members in California.

Southam, 39, fills a position left vacant by the resignation of Michael Gallagher, a Southern California investment banker who had taken the job on an interim basis last year.

Health Systems is still struggling to recover from a number of key management departures made during its failed merger attempt with WellPoint Health Networks.

Last week, investment banker Jay Gellert was named president and chief operating officer of the Woodland Hills-based parent firm.

Also Tuesday, Health Systems named Michael Pugh president and chief executive of its other major subsidiary, QualMed, a Colorado-based managed-care firm.

Southam and Pugh will report to Gellert.

Southam, a UCLA-trained physician, has held a number of executive jobs with CareAmerica, also based in Woodland Hills, since joining the firm 11 years ago after completing a residency in internal medicine at Cedars-Sinai Medical Center in Los Angeles.

During Southam’s three-year tenure as chief executive, CareAmerica’s HMO membership grew from 179,000 to 250,000. CareAmerica is a subsidiary of Burbank-based UniHealth, a large health-care company. Southam is also chairman of the California Assn. of HMOs, a trade group.