Rosenthal urges regulators to postpone HSI, Foundation merger.

Decrying a "merger mania" under way among California's health maintenance organizations, State Sen. Herschel Rosenthal, D-Van Nuys, has asked the Department of Corporations to postpone the merger of Woodland Hills-based Health Systems International with Foundation Health Corp. of Rancho Cordova.

In a letter last week to DOC Commissioner Keith Bishop, Rosenthal, who chairs the Senate Committee on Insurance, said the merger threatens the freedom of choice of California health care consumers.

Rosenthal had previously asked Bishop to postpone the proposed merger of FHP International Corp. and PacifiCare Health Systems Inc., both located in Orange County.

Rosenthal expects to introduce a bill by month's end to require HMOs to prove that planned mergers protect the interests of enrollees and do not reduce competition, according to an aide, Michael Shapiro.

In his most recent letter, Rosenthal asks the DOC to hold off on approval of the two mergers until the HMO bill is voted on.

"We are witnessing HMO merger mania - an accelerated trend towards HMO consolidation that will further diminish health care choices for Californians," Rosenthal wrote. It is time to step back and "take a fresh look at ... whether the public interest is being fully protected as HMOs concentrate power in fewer and fewer for-profit, corporate hands."

If the HSI-Foundation and FHP-PacifiCare mergers are approved, more than 9 million of the state's 14 million HMO enrollees will belong to one of three mega-plans. The third plan is operated by nonprofit Kaiser Permanente.

Bishop has not postponed either of the proposed mergers, a spokesman said.

State hearings held by the Department of Corporations last week in Los Angeles on the HSI-Foundation deal drew little public interest compared to rancorous hearings a week earlier over the FHP-PacifiCare merger.

Critics of the FHP-Pacificare deal argued that PacifiCare had a spotty track record concerning patient welfare, and that the merger would give the new entity an undue dominance in Medicaid.

Supporters of the merger, including the California Association of HMOs, say it and similar deals lead to lower overhead for the companies and, in turn, lower costs to consumers.

"You can't blanketly say mergers equal poor or less quality care," said the association's executive director Myra Snyder. "Rosenthal's call is unreasonable."

Kaiser to the rescue

In a little-noted bit of do-goodism, Kaiser Permanente loaned L.A. Care Health Plan $5 million earlier this month to keep the nascent HMO afloat until its March 1 opening date.

L.A. Care is a public HMO created by Los Angeles County as part of state and federal government efforts to move Medi-Cal recipients into managed care. The plan is expected eventually to serve 650,000 of the county's 1.2 million Medi-Cal eligible recipients.

"The loan came at a critical time for us," said Keith Malone, a spokesman for L.A. Care. "It was a sort of carry-over for us until we go 'live.'"

The opening of L.A. Care had originally been slated for December but was delayed as the state completed its own infrastructure to accommodate the shift to managed care.

"With the expectation of a Dec. 1 go-live we'd made certain decisions," Malone said, including hiring staff and management. With the three-month delay, the HMO's ability to take in Medi-Cal funds was also put off, but the employees still needed to be paid, Malone said.

"We turned to our providers for help and Kaiser was the one to step forward," Malone said.

In addition to Kaiser, L.A. Care has partnership agreements with Blue Cross of California, Maxicare, United Health Plan and others. L.A. Care manages the administration, while the partner plans deliver actual treatment.

The Health Insurance Plan of California, better known by its acronym of HIPC (pronounced hip-ik) has announced that beginning in July it will extend its minimum eligibility to include businesses with as few as two employees.

Currently, companies must have at least three employees to be eligible for HIPC's group purchasing of health insurance.

HIPC is a voluntary, statewide health insurance purchasing cooperative designed for companies with no more than 50 employees. HIPC is run by the state's Managed Risk Medical Insurance Board, and uses group purchasing to make health insurance affordable to small businesses.

"On the surface this seems like a minor change," Patricia Steinbarth, executive director of the plan, said of the new requirements. But "the smaller the company, the more difficult it is to get coverage. This will make life easier for the entrepreneur, start-ups and those businesses who choose to remain small."

Reason to smile

Monterey Park dentist Eugene Sekiguchi has been named the new director of the California Dental Association. The CDA represents about 19,000, or 70 percent, of the state's actively practicing dentists.

Sekiguchi said he will concentrate on patient rights, professionalism and oral health in his new role.

Sekiguchi came to dentistry late in life, having worked as an electrical engineer for the Los Angeles Department of Water and Power for 11 years, and later operating a string of photo processing businesses.