FPA Medical Management late last week signed a letter of intent to enter a long-term global capitation agreement with Foundation Health Systems, a Woodland Hills, Calif.-based managed-care company. Terms were not disclosed. FPA, a San Diego-based physician practice management company, said the health plan will accelerate execution of global capitation agreements to the fourth quarter of 1997 from the fourth quarter of 1998. FPA already serves 340,000 of Foundation's 3.1 million enrollees nationwide.
Delays in obtaining regulatory approvals have forced Cigna Corp. to extend for a second time its offer to purchase outstanding shares of Hooksett, N.H.-based Healthsource. The offer, previously scheduled to expire April 30, is now extended until May 30. Originally, the offer of $21.75 per share in cash was scheduled to expire April 2. In February, Cigna announced it would buy Healthsource for about $1.7 billion, including paying off about $250 million of Healthsource debt.
Sun Healthcare Group, an Albuquerque-based long-term-care company, late last week unveiled plans to sell all 46 of its outpatient rehabilitation facilities in the U.S. and Canada by year-end. Terms of the sale were not disclosed, and a buyer or buyers were not named. Sun said the facilities' performance and integration into the rest of its inpatient and ancillary services businesses fell short of expectations. Sun plans to focus on its skilled-nursing and contract-rehabilitation services.
MedPartners completed its acquisition of Aetna U.S. Healthcare's physician operations, including a practice management arm called Aetna Professional Management Corp. and most of the HealthWays Family Medical Centers. The Birmingham, Ala.-based physician practice management company bought 47 HealthWays centers employing 189 physicians and six independent practice associations representing 800 doctors. Terms were not disclosed. MedPartners and Aetna U.S. Healthcare have a 10-year, nonexclusive contracting alliance.
Catholic Healthcare West completed merger agreements late last week with two California Catholic hospitals, 110-bed St. Francis Medical Center of Santa Barbara and 130-bed Marian Medical Center in Santa Maria. The hospitals will become part of CHW's Central Coast region, which now includes four hospitals. With the merger, San Francisco-based CHW operates a total of 37 hospitals in Arizona, California and Nevada. The hospitals' sponsors, Franciscan Sisters of the Sacred Heart, Frankfort, Ill., and Sisters of St. Francis of Penance and Christian Charity, Redwood City, will join CHW as co-sponsors.
More than a year of negotiations ended late last week with the sale of 73-bed Itasca Medical Center in Grand Rapids, Minn., to a coalition of not-for-profit providers known as the Partners Organization. The coalition came forward when Itasca County decided against selling its hospital to a higher-bidding for-profit organization. Over time, however, the value of Partners' proposal grew to about $25 million from the initial offer of about $20 million. The final deal involves a pledge to build a new $14 million healthcare complex, including acute-care services, within five years. The deal also blocks Partners' members from withdrawing assets from the new corporation and guarantees Itasca County residents a majority of the seats on the board. The Itasca County Board of Commissioners approved the final terms in a 4-0 vote. The Partners are Benedictine Health System, Duluth, Minn.; Allina Health System, Minneapolis; and St. Mary's/Duluth Clinic.
Bruce Fried, director of HCFA's Office of Managed Care, has warned that Molina Medical Centers, a Long Beach, Calif.-based HMO serving Medi-Cal enrollees in seven counties, is in violation of federal law. Medi-Cal is California's Medicaid program. In a letter to the state health department made public late last week, Fried said Molina hasn't complied with the law requiring that 25% of the plan's enrollment be commercial, putting its full-risk license in jeopardy. Molina officials blame the state for not obtaining waivers to the federal rule, which it calls unreasonable. Critics say the situation illustrates lax oversight of managed-care plans that serve the poor.