The acquisition of PacifiCare Health Systems Inc. by industry giant UnitedHealth Group Inc. would mean more competition in the health insurance business -- not less, the companies' chief executives said Friday.
UnitedHealth's William W. McGuire and PacifiCare's Howard Phanstiel described the $8.1-billion deal -- which must win regulatory and shareholder approval -- as a step toward a more rational healthcare system.
Answering criticism from doctor and consumer groups, the two men said a combined company would better compete against industry leader WellPoint Inc., which owns Blue Cross of California, benefiting consumers as well as investors.
"I understand all the noise, I understand that everybody has positions," said McGuire, 56. "Those concerns are legitimate."
But the purchase, the two executives said, would give PacifiCare, which operates mostly in California, national resources and advanced technology that would allow it to better serve larger companies and thus compete better with WellPoint.
McGuire said he also hoped to expand PacifiCare's business serving small and medium-sized companies. "We're going to bring in some new things there," he said. "This very much fits into our agenda to try to bring better healthcare services to different constituents and do it in a way that is unbounded by geography and other traditional restraints. I'm committed to it as I can be."
McGuire said the acquisition also would help advance a long-term answer to problems with the nation's healthcare system by using technology to drive down costs and by expanding efforts to track doctor performance and manage chronic diseases.
Over the long term, however, such an answer will involve finding a way to ensure that everyone receives a minimum level of care, he said. But some treatments will be available only to those who can afford them.
"There is not enough money ... to pay for the healthcare system as it operates today. It is indiscriminate, it is non-scientifically based, it is founded on anecdote as much as it is science," McGuire said. "We have to change course."
Under the deal announced Wednesday, Cypress-based PacifiCare, the nation's biggest administrator of Medicare insurance plans, would be acquired by Minnetonka, Minn.-based UnitedHealth, the nation's second-largest health insurer. Combined, the two would provide health insurance to more than 25 million Americans.
