SouthCare Medical Alliance, an Atlanta-based PPO founded by eight not-for-profit hospital systems in 1985, has been sold to Principal Health Care, Rockville, Md. Terms weren't disclosed.
Principal owns and operates 16 HMOs and 17 PPO locations nationwide covering 750,000 enrollees. The agreement will add 550,000 SouthCare enrollees to Principal's total membership.
The deal will enable Principal and SouthCare to accelerate the development of a new HMO for the Atlanta area, said Ken Linde, Principal's president and chief executive officer.
The agreement illustrates a trend among some PPOs to find a partner that will accept financial risk to compete for managed-care business. Launching an HMO by itself could have cost SouthCare as much as $70 million in the next 10 years, executives estimated.