Ex-HMO Lobbyist Named a Key Regulator of HMOs

A veteran health industry executive who once ran the lobbying efforts of a large California health maintenance organization has been appointed a key regulator over the HMO industry.

Gov. Pete Wilson named Gary G. Hagen, 48, assistant commissioner of the Department of Corporations in charge of its health-care division. The agency regulates HMOs serving about 16 million Californians.

The agency post had been vacant for about a year. Hagen, a Republican, starts his new job Monday.

Hagen’s appointment comes as the state’s HMO industry faces growing criticism from California legislators, health-care advocates and others. That criticism has prompted a rash of legislation and two November ballot initiatives that would place tighter regulations on HMOs.

The Department of Corporations has also been the target of criticism from some legislators, the California Medical Assn. and consumer groups for being too closely tied to the industry it regulates. The appointment of Hagen fueled more criticism Monday.

“It’s pretty discouraging that Hagen’s background is so heavily industry-dominated,” said Jeanne Finberg, staff attorney for Consumers Union’s West Coast office in San Francisco.

“His lobbyist background causes us some concern, but we hope he’ll be independent and will take on the serious consumer protection functions of the agency.”

Hagen’s most recent job was as president and chief executive of Health Care Solutions West, a company put together by Prudential Insurance Co. and other health-care organizations to bid for a government health contract for military retirees and their families in the Southeast.

Hagen was vice president of government relations for Foundation Health Corp., a large Rancho Cordova-based HMO, from 1988 to 1991. In that job, he was responsible for overseeing the company’s legislative activities in Sacramento.

As assistant commissioner, Hagen will run the daily operations of the health-care analysts, accountants and lawyers who oversee HMO regulation. He will be the top deputy on health-care matters to Keith Bishop, commissioner of the Department of Corporations.