YOU ARE HERE: LAT HomeCollections

PacifiCare Supplants FHP as Top Supplier of Care for the Elderly


CYPRESS — PacifiCare Health Systems Inc. said Wednesday that it has nudged FHP International Inc. out of its long-held position as the nation's largest supplier of managed-care benefits for the elderly.

The announcement that PacifiCare, a Cypress-based health maintenance organization, has more Medicare recipients on its membership rolls than Fountain Valley-based FHP International Inc. is sure to escalate the two companies' battle to sign up seniors.

HMOs across the nation are scrambling to enroll Medicare recipients in their managed-care plans. Such enrollees are considered lucrative for HMOs because the federal government pays the companies an average of $400 a month for each Medicare recipient they sign up. In return for that guaranteed revenue, the companies offer enrollees full medical benefits.

Though virtually all HMOs either have or are considering strategies to enroll seniors, PacifiCare and FHP are the undisputed leaders of the pack.

"We have been watching this for a while," PacifiCare Chief Executive Alan Hoops said of his company's rising Medicare HMO enrollment. "It's an important market for us."

For the last year, PacifiCare's senior enrollment has been steadily gaining on that of FHP, which was the first company to offer such benefits on the West Coast. In 1981, FHP participated in a government-sponsored pilot program when the U.S. Health Care Finance Administration began considering the possibility of allowing HMOs to enroll Medicare recipients as a way to save money. Medicare HMOs became legal in 1983.

But the first-place spot will be hard to hold.

PacifiCare has 317,968 Medicare recipients enrolled in its Secure Horizons Medicare plan--only 579 more than FHP's total enrollment in its Senior Plan and Senior Plus Plan, according to the latest federal government figures, released this week.

Wall Street responded positively to the news that both companies have made gains in the last year. PacifiCare rose $1.75 a share on the Nasdaq market to close at $52.50. FHP stock, also traded on Nasdaq, gained 75 cents to close at $26.25 a share.

At FHP, officials expressed mild disappointment with the latest figures.

"It is so close," spokeswoman Ria Carlson said. "Well, I guess congratulations are in order for PacifiCare."

Carlson said holding the lead may prove more difficult for PacifiCare than achieving it. Though PacifiCare has been enrolling Medicare beneficiaries at a steady clip, FHP may soon get a shot in the arm.

The company announced in January that it will buy TakeCare Inc., a Northern California HMO. The buyout, if approved by shareholders and regulators, would create a company with 1.6 million members.

More importantly, the proposed $1-billion deal would give FHP a much-needed inroad into the Medicare HMO markets in Northern California and Colorado, two regions where TakeCare is most active.

Secure Horizons Takes No. 1 Spot

PacifiCare's Secure Horizons senior health care plan has edged past FHP to become the largest Medicare HMO in the nation. PacifiCare and FHP share about one-third of the HMO market. Medicare recipients in the top five HMOs:

PacifiCare: 317,968 FHP: 317,389 Humana: 275,952 Kaiser Permanente: 219,946 United Health Care: 88,110 All others: 650,626

Source: Health Care Finance Administration; Researched by JANICE L. JONES / Los Angeles Times

Los Angeles Times Articles