Talbert Medical Group, the former staff-model operation of FHP International, has signed a contract with an FHP competitor, Foundation Health.
It's one sign that the medical group is moving toward profitability and independence from its parent.
Talbert signed a one-year renewable contract to provide medical services to Foundation enrollees in Southern California effective Nov. 1. Talbert runs 19 medical centers in Los Angeles, Orange and Riverside counties, where Foundation enrollees will have access to 194 employed Talbert physicians and more than 2,000 contracted specialists.
Talbert's total operations include 52 medical centers with 360 physicians and 80 dentists in Arizona, California, Nevada, New Mexico and Utah.
FHP created Talbert as a subsidiary physician practice management company on Jan. 1, 1996, and continues to hold a 92% equity stake. Talbert failed to garner much business with other insurers because of its FHP ties.
In July, Fountain Valley, Calif.-based FHP announced it would spin off Talbert as an independent, publicly traded company. A public offering will occur some time after the closing of FHP's sale to Cypress, Calif.-based PacifiCare Health Systems, expected in January (Dec. 9, p. 35).
Since the intention to spin off Talbert was announced, FHP competitors have expressed greater interest in contracting with Talbert, said Charlie Eldredge, FHP's investor relations director.
Talbert isn't expected to become profitable "for some time," he said. The group continues to suffer from overcapacity, and while it has signed approximately 30 contracts with various PPOs and HMOs, virtually all its revenues flow from FHP, he said.
For the nine months ended Sept. 30, Talbert had a net loss of $5.2 million on revenues of $351 million.
Eldredge said the outside contracts are "a fairly new development." As of Sept. 30, Talbert served nearly 304,000 capitated lives, mainly from FHP.
FHP is among several HMOs that divested physician groups in the past two years.