PacifiCare Has Its Eye on the Prize : Growth Pill
PacifiCare Health Systems Inc.’s planned acquisition of FHP International Corp. for $2 billion in stock would give the Cypress-based health-care giant a larger foothold in the lucrative Medicare market. If approved by regulators, the deal would create the nation’s fifth-largest managed-care company with about 4 million patients--almost 1 million of whom receive Medicare. A look at the companies:
PacifiCare Health Systems
* Founded: 1978
* Headquarters: Cypress
* Total membership: 1,996,000
* Commercial: 1,407,000
* Medicare: 537,000 (through the Secure Horizons health plan)
* Medicaid: 52,000
* Doctors in network: 39,500
* States served: California, Florida, Oklahoma, Oregon, Texas and Washington
* 1995 revenue: $3.7 billion
* 1995 earnings: $108.1 million
FHP International
* Founded: 1961
* Headquarters: Fountain Valley
* Total membership: 1,902,000
* Commercial: 1,511,000
* Medicare: 391,000 (through the FHP Senior Plan)
* Doctors in network: 51,000
* States served: Arizona, California, Colorado, Illinois, Indiana, Kentucky, Nevada, New Mexico, Ohio, Texas and Utah, plus Guam
* 1995 revenue: $3.9 billion
* 1995 earnings: $37.3 million
Operations
PacifiCare Health Systems and FHP International Corp. overlap in California and Texas.
What About Consumers?
It’s unclear what the PacifiCare-FHP merger would mean for members, but here are some questions they might want to ask their employers or health plans:
* Are medical premiums likely to go up? The HMOs said the merger will make them more cost-efficient and help them hold down medical premiums. But some worry that as fewer HMOs gain more marketplace clout, they will gain the power to raise prices.
* Will my Medicare benefits remain the same? The federal government requires Medicare HMOs to offer the same basic medical benefits. However, HMOs such as PacifiCare and FHP differ on prescription drug benefits, such as co-payments, annual reimbursement caps and limits on the number of approved drugs. Look for PacifiCare to try to standardize drug benefit plans.
* Will I get to keep my doctor? The HMOs say the merger would broaden the overall number of doctors available to members. But in some earlier mergers, HMOs have attempted to reduce costs by dropping doctors, usually specialists, from their list of approved providers.
Sources: Company representatives, Times and wire reports
Researched by JENNIFER OLDHAM / Los Angeles Times
