FPA to Buy Orange Coast Managed Care

Moving to gain a foothold in Orange County, FPA Medical Management Inc., the giant San Diego company that manages medical practices, said it will buy a large doctors organization that serves St. Joseph Hospital.

FPA said it will purchase Orange Coast Managed Care Services Inc., a privately held Orange-based manager of two local doctors groups, through a stock swap.

The two organizations include the St. Joseph Medical Group, which employs 50 physicians, and a separate, loose association of 570 physicians in small practices.

Terms weren’t disclosed.

The deal is subject to approval by regulators and shareholders of the doctors’ groups.

Larry Ainsworth, chief executive at the hospital, which holds an 8% stake in Orange Coast, said the local doctors organizations could gain access to funds to invest in information systems and other management technologies.

He said the proposed ownership changes shouldn’t affect patients, because FPA has indicated its plans to sign a long-term agreement with the hospital.

Officials for Orange Coast didn’t return calls seeking comment.

The transaction is expected to add $60 million in annual revenue to acquisition-minded FPA, which expects to report sales of more than $1 billion for last year.

Dr. Sol Lizerbram, FPA’s chairman, said the acquisition will give the company a presence in Orange County, plugging a hole in the company’s California market.

FPA, which already serves 315,000 HMO members in California, will pick up another 120,000 health plan members through the deal. FPA serves 1 million members nationwide.

Lizerbram said the company probably would continue to use the St. Joseph name Orange Coast has been looking for a merger partner for more than two years.

Previous merger talks with Monarch Healthcare Inc., a sizable doctors’ organization based in Mission Viejo, fell apart in a dispute over control of the proposed combined firm, an Orange Coast official said at the time.