FPA Medical Management, Inc. announces agreements with Foundation Health Corporation to service 294,000 HMO members.

SAN DIEGO, Calif.--(BUSINESS WIRE)--July 1, 1996--FPA Medical Management, Inc. (Nasdaq:FPAM) announced today that it has signed definitive agreements with Foundation Health Corporation (NYSE:FH) and its affiliates. The transactions are expected to add 294,000 HMO members through the purchase of two IPAs and 30 healthcare centers, bringing FPA's total HMO membership to more than 630,000 HMO members compared to 64,000 HMO members serviced the same time last year.

The two IPAs, located in Arizona and Florida, consist of 63 primary care physicians and 21,000 HMO members. The health care centers include 12 Foundation Health Medical Group centers located in FPA's existing service areas of Sacramento and Ventura counties in California, and 18 Thomas-Davis Medical Centers, one of Arizona's most respected providers of quality healthcare services. There are approximately 245 primary care physicians in the health care centers. Following the transactions, FPA will have the largest non-academic primary care physician network in Arizona. The addition of the Florida IPA is expected to accelerate FPA's expansion in that service area. Foundation Health Corporation's Florida HMO will also include in its provider network, FPA's newest subsidiary in Florida, Family First Medical Centers, to service Foundation s commercial and senior members in the area.

FPA s existing corporate and information facilities in California, Arizona and Florida will manage the new HMO members.

The consideration to be paid by FPA is approximately $220 million, consisting of cash, common stock and notes, and will be accounted for using the purchase method of accounting. The closing of the purchase of the IPAs is effective as of July 1, 1996. The purchase of the health care centers is expected to close on or about October 1, 1996 and is subject to customary conditions, including regulatory and other approvals. The transactions are expected to add $60 million to FPA s 1996 revenues.

Commenting on the transaction, Dr. Seth Flam, Chief Executive Officer of FPA, stated, "We are very pleased to be able to expand our relationship with Foundation Health. This transaction is another demonstration that HMOs are confident in FPA's ability to effectively manage and deliver high quality healthcare to their members. This agreement with Foundation Health is consistent with our strategy and is expected to be immediately accretive to earnings."

Dr. Sol Lizerbram, Chairman and President, added, "We are excited to have the opportunity to continue to expand our HMO membership base and IPA network affiliation in our existing service areas of Northern California, Arizona and Florida. This transaction gives FPA significant contracting opportunities with specialty care physicians and hospitals in our service areas."

FPA Medical Management, Inc. is a national health care management service organization which organizes and manages primary care physician networks to contract with HMOs and other prepaid health insurance plans to provide physician and related health care services.

Certain statements contained in this release are forward looking. Although FPA Medical Management, Inc. believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. Factors which could cause actual results to differ from expectations include the difficulty in controlling healthcare costs, increasing and managing growth in the number of new enrollees in the FPA Network and the possible negative effects of prospective healthcare reform. For other important factors which may cause FPA Medical Management, Inc.'s actual results to differ materially from expectations and underlying assumptions, see reports filed by FPA Medical Management, Inc. with the Securities and Exchange Commission.

CONTACT: FPA Medical Management, Inc.

Investor Contact: Steven M. Lash

Executive Vice President and

Chief Financial Officer

619-295-7005

or

Robert P. Jones/Caroline Babbitt

Morgen-Walke Associates

212-850-5600

or

Media Contact: Miriam Adler/Carol Schneller

Morgen-Walke Associates

415-296-7383