Carondelet Health Networks and PacifiCare Reach Agreement; St. Joseph's and St. Mary's Hospitals in Tucson, Ariz. Will Continue Serving PacifiCare and Secure Horizons Members.

Business Editors & Health/Medical Writers

PacifiCare of Arizona, a subsidiary of PacifiCare Health Systems Inc. (Nasdaq:PHSY), and Carondelet Health Networks have signed an extension to their contract that will provide continued hospital services for PacifiCare of Arizona members.

This agreement, effective today, extends through Dec. 31, 2003, with an option to extend through Dec. 31, 2004, and covers all of PacifiCare of Arizona's product lines, including its commercial HMO, Point-of-Service (POS) and Preferred Provider Organization (PPO) plans, as well as Secure Horizons, the company's Medicare+Choice (M+C) HMO plan. Carondelet Health Networks has two hospitals in Tucson -- St. Joseph's Hospital and St. Mary's Hospital.

The agreement with Carondelet Health Networks supports PacifiCare's planned expansion of its commercial market share for 2002 and beyond.

"We are pleased to continue our positive relationship with Carondelet," said Mark El-Tawil, regional vice president of PacifiCare of Arizona. "Our relationship with a quality provider like Carondelet ensures that our members will have continued access to quality health services. We're committed to working with partners who share our values and dedication to service, quality and clinical outcomes."

"This agreement clearly demonstrates the positive value that two health-care organizations working together in good faith can bring to the communities we serve," said Tom Pepping, chief financial officer of Carondelet Health Networks.

"We have worked diligently to assure patients in Tucson that this extended agreement between our companies offers stable, quality physician and hospital services for PacifiCare and Secure Horizons members."

Carondelet Health Network is Southern Arizona's largest health-care provider and a nonprofit organization sponsored by the Sisters of St. Joseph of Carondelet. A comprehensive array of inpatient, outpatient and home care services are offered by Carondelet at a variety of sites including St. Joseph's and St. Mary's hospitals and the Carondelet Imaging Center in Tucson, Holy Cross Hospital in Nogales, Ariz. and the Carondelet Medical Mall of Green Valley, Ariz.

PacifiCare Health Systems is one of the nation's largest health and consumer services companies with approximately $11 billion in annual revenues. Primary operations include health insurance products for employer groups and Medicare beneficiaries in eight states and Guam, serving approximately 3.4 million members.

Other specialty products and operations include pharmacy and medical management, behavioral health services, life and health insurance and dental and vision services. More information on PacifiCare can be obtained at www.pacificare.com.