State Urged to Block PacifiCare’s Deal for FHP

PacifiCare Health Systems’ proposal to acquire its largest managed-care competitor in Orange County struck a raw nerve Wednesday as opponents stepped forward to urge state regulators to block the deal.

About 100 consumer advocates, medical professionals and patients flocked to Irvine City Hall for the first day of unprecedented state hearings into Cypress-based PacifiCare’s proposed $2.1-billion buyout of Santa Ana-based FHP International Corp.

In pointed but orderly comments, some supported the proposal while critics resurrected a variety of complaints about PacifiCare’s record on delivering quality care to its members.

San Diego resident Patricia MacInnes gave a moving account of how she believes PacifiCare providers failed to treat her mother’s long-standing heart condition, resulting in her death.

“I believe that my mother could be alive today had she received appropriate medical treatment when she first became ill,” she said.

But PacifiCare and FHP executives and their supporters praised the merger’s merits to officials of the state Department of Corporations, which regulates HMOs and sponsored the hearing.

The executives defended the proposed deal, saying the combined company would provide consumers access to an expanded number of hospitals and doctors across the state and enable FHP patients to keep their doctors.

They said efficiencies achieved by consolidation of staff would enable the combined company to both enhance benefits and keep a tight rein on health-care costs.

“People have an excellent memory for the negative things that have happened with managed care,” said Mark Wagar, an official of MedParters Inc., an operator of medical groups, who spoke in favor of the merger. “PacifiCare members have significantly lower grievance levels per 1,000 than any other plan we deal with.”

The acquisition has already been cleared by federal regulators and the state attorney general. But Corporations Commissioner Keith Bishop, who is under increasing pressure from legislators to prove he’s a strong regulator of HMOs, set up the hearings in Irvine and today in San Diego.

Critics Wednesday recalled how the company previously drew fire for discouraging doctors from prescribing drugs considered standard and failing to adhere to a law requiring it to notify consumers about how to file complaints with regulators.

The deal also was opposed by the Orange County Medical Assn., which expressed concern that the combination would give PacifiCare too large a share of the HMO markets in Southern California and lead to a deterioration in health care.