2 HMOS MAY UNITE; BLUE SHIELD-CARE AMERICA DEAL WOULD COST $175 MILLION.Byline: Ben Sullivan Daily News Staff Writer Woodland Hills-based CareAmerica Health Plans is being bought by Blue Shield of California Blue Shield of California is a not-for-profit health insurance provider headquartered in San Francisco, California. An independent licensee of the Blue Cross and Blue Shield Association, Blue Shield of California is an incorporated, wholly owned subsidiary of California Physicians' for $175 million, the companies announced Tuesday, in a move that would more than double Blue Shield's presence in the competitive Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, market. Nonprofit A corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive. Nonprofits are also called not-for-profit corporations. Nonprofit corporations are created according to state law. Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. , based in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , is buying CareAmerica and the related CareAmerica Life Insurance from their parent company, UniHealth. The proposed purchase would add CareAmerica's 265,000 HMO enrollees to Blue Shield's Southern California ranks, including 45,000 Medicare members. Blue Shield currently has fewer than 250,000 Southern California HMO enrollees. The purchase must receive regulatory approval from the California Department of Corporations, the California Department of Insurance The California Department of Insurance (CDI), established in 1868, is the angency charged with overseeing the regulation of insurance regulations, enforcing statutes mandating consumer protections, educating consumers, and fostering the stability of insurance markets in the state and the Federal Trade Commission. Blue Shield officials said they hope to receive such approvals by year's end. The proposed deal is unusual in that it will involve the conversion of the for-profit CareAmerica companies into nonprofit entities. ``It's definitely bucking the trend,'' said Peter Lee, director of the HMO Consumer Protection Project at the Los Angeles-based Center for Health Care Rights. ``We've seen many conversions and acquisitions of nonprofits into for-profit companies,'' Lee said, most notably the conversion of Woodland Hills-based Blue Cross of California into the for-profit WellPoint Health Networks in May 1996. ``This is a rare example of a merger that goes the other way,'' Lee said. Industry analysts said the proposed deal reflects the growing competition that nonprofit, managed-care companies like Blue Shield face from their for-profit counterparts. Also, as health-care providers including physicians and hospitals band together to gain more negotiating strength against managed-care companies, and employers join forces to wrangle lower premiums from them, HMOs are starting to experience a boomerang boomerang (b  `mərăng'), special form of throwing stick, used mainly by the aborigines of Australia. effect: The very
consolidation they helped initiate by squeezing suppliers is forcing the
HMOs to further consolidate themselves.
``We envision fewer than a dozen health plans operating in (the region) in the next decade, and a like number of sellers,'' said Jim Lott, head of policy development and advocacy for the Healthcare Association of Southern California. In April, Woodland Hills-based Health Systems International Inc. and Foundation Health Corp. merged to create the nation's fourth-largest publicly traded, managed-care company. PacifiCare of California and FHP fhp or f.hp. abbr. friction horsepower Health Care similarly merged this spring. ``It's absolutely the case that nonprofit plans feel many of the same market pressures relative to purchasers and providers that for-profits do,'' Lee said. CareAmerica's parent company, UniHealth, is a Woodland Hills-based holding company that owns hospitals, physician management companies and other health-care companies. UniHealth and Blue Shield held merger talks in 1993 that failed to produce a deal. Tuesday's proposed purchase would make Blue Shield the fifth-largest HMO operator in Southern California, behind the likes of Pasadena-based Kaiser Permanente Kaiser Permanente is an integrated managed care organization, based in Oakland, California, founded in 1945 by industrialist Henry J. Kaiser and physician Sidney R. Garfield. , PacifiCare in Cyprus and Woodland Hills-based Foundation Health Systems, each of which has more than 1 million Southern California HMO enrollees. Blue Shield HMO members total: 447,000 HMO members S. Calif.: 245,000 Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. revenue 6/97: $1.54 billion CareAmerica Health Plan HMO members: 265,000 Members S. Calif.: 265,000 Annual revenue 6/97: $541 million Total members: 712,000 Members S. Calif.: 510,000 Total revenue 6/97: $2.08 billion Source: Blue Shield of California CAPTION(S): Box Box: (Color) BLUE SHIELD (See text) |
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