Foundation Health Systems last week agreed to acquire not-for-profit PACC Health Plans, a 116,000-enrollee health plan based in Clackamas, Ore. The deal will create the largest for-profit managed-care plan in Oregon.
FHS is the managed-care powerhouse created earlier this month through the merger of Foundation Health Corp. and Health Systems International (April 7, p. 86). PACC was formed in 1938 by a group of physicians, and its board is largely made up of doctors. The transaction falls in line with the former HSI's strategy of acquiring provider-owned plans.
Including beneficiaries of the Civilian Health and Medical Program of the Uniformed Services, the acquisition will give FHS 500,000 enrollees in its Northwest region, which includes Idaho, Oregon and Washington.
The sales price, which was not disclosed, will be used to endow a foundation to be chaired by former U.S. Sen. Mark Hatfield of Oregon. By creating the foundation, PACC expects to head off objections to the deal.
PACC, which had more than $133 million in revenues last year, has 67,000 HMO enrollees and the rest of its enrollees are in a PPO. The existing FHS plan in the state, Qual-Med Oregon Health Plan, will merge into PACC to become FHS of Oregon. PACC's southern Washington enrollees, meanwhile, will be transferred to FHS' Qual-Med Washington Health Plan.
"Our board looked for just the right partner so that PACC could build on its 60 years of market experience,"said C. Edward Skeeters, M.D., chairman of PACC's board.
FHS also completed the acquisition of Advantage Health, a managed-care company in Pittsburgh, from St. Francis Health System for $12.5 million in cash. FHS will operate Advantage in combination with FHS' QualMed Plans for Health of Pennsylvania.
St. Francis has a short-term option to reacquire a 20% stake in Advantage for $2.5 million. Advantage will continue long-term provider agreements with St. Francis, a comprehensive delivery system including five hospitals in Ohio, western Pennsylvania and West Virginia.