Memorial Health Services and FHP, a subsidiary of FHP International Corp., have signed a letter of intent for Memorial to acquire 230-bed FHP Hospital-Fountain Valley (Calif.) and its adjacent medical office buildings.
The proposed deal is part of a restructuring plan in which FHP, a Fountain Valley-based HMO, will sell its four hospitals and place its physician clinics in a separate company called Talbert Medical Management Corp.
In July, FHP decided to restructure because enrollment in the staff-model HMO was stagnating, while the contracting side of FHP's business was growing. It was also becoming cheaper for FHP to contract with hospitals than to run its own facilities (July 3, p. 9).
FHP will contract with Long Beach, Calif.-based Memorial to provide hospital services for FHP enrollees and also plans to lease outpatient facilities on the site.
Financial details of the transaction will be worked out once a definitive agreement is reached, about mid-month, an FHP spokeswoman said.
FHP enrollees will be able to choose from among Memorial's hospitals, which include 752-bed Long Beach Memorial Medical Center and 220-bed Saddleback Memorial Medical Center in Laguna Hills. Earlier this month, 224-bed Anaheim (Calif.) Memorial Hospital signed a letter of intent to merge with Memorial.
Beginning Jan. 1, Talbert Medical Management will run FHP's 57 physician clinics and contract with other payers.