Managed Care Report

Capital Blue Cross and Pennsylvania Blue Shield (Harrisburg, PA) will offer healthcare coverage to any or all employers in south central Pennsylvania and the Lehigh Valley covered by Physicians Care PPO, with the same benefits, rates, and underwriting standards that apply to its other customers. Working with the state Insurance Department and Physicians Care PPO, the company stepped in to offer continuous coverage to the PPO’s employer groups after its net worth fell below state requirements, forcing the PPO under the control of the Insurance Department.

• Scan (Long Beach, CA) has been selected a member of the National Chronic Care Consortium (NCCC; Bloomington, MN). NCCC and Scan share a vision of integrated care for individuals with chronic health conditions, the NCCC said. In addition, Sam Ervin, president/CEO of Scan, has been named to the NCCC board. In other news, Scan received an Honorable Mention from the American Association of Health Plans for its immunization outreach program for seniors.

PacifiCare of Texas (Dallas) and Texas Health Resources (Dallas), parent company of Harris Methodist Health Plan (Arlington, TX), have signed a definitive agreement under which PacifiCare will purchase Harris Methodist. The transaction is subject to regulatory approval and the completion of normal closing conditions, which are expected in the next 90 days. Once approved, PacifiCare said, the transaction will add about 300,000 HMO members to PacifiCare and will boost PacifiCare’s HMO membership in Texas to 500,000, making it one of the largest health plans in the state. In addition to acquiring Harris’ HMO membership, PacifiCare has established a long-term agreement with Texas Health Resources’ hospitals. The healthcare networks of both plans will jointly consist of about 6,500 doctors and specialists, 54 hospitals, and other primary and specialty care clinics with a potential to serve more than 4 million consumers.

• Cigna Corp. (Philadelphia) reported 3Q99 ended Sept. 30 total revenues of $4.7 million, compared to 3Q98 revenues of $4.3 million. The company reported an operating income from continuing operations in 3Q99 of $286 million, $1.47 per share, compared to 3Q98 operating income from continuing operations of $237 million, $1.12 per share. Cigna’s 3Q99 operating income excludes an after-tax gain of $1.2 billion for the sale of the property and casualty (P&C) business to ACE Limited, a $400 million after-tax charge attributable to certain Brazilian investments, and $10 million of after-tax restructuring charges for cost reduction initiatives subsequent to the sale of P&C.

• Oxford Health Plans (Norwalk, CT) President William Sullivan resigned from the company to pursue other interests. Sullivan joined Oxford in 1988 and helped build the company. He was named president in 1998, Oxford said. Kevin Hill, senior vice president of sales, has been promoted to executive vice president and will assume responsibility for sales and marketing. Oxford reported 3Q99 ended Sept. 30 revenues of $1.1 billion, compared to $1.2 billion in 3Q98. As of the end of 3Q99, Oxford’s total membership was 1.6 million, compared to 1.7 million at the end of 2Q99. The company recorded a net income in 3Q99 of $28.3 million, 34 cents per share, compared to a 3Q98 net loss of $47 million, 58 cents per share. The quarter’s results were impacted by non-recurring items and changes in prior period estimates of medical costs, Oxford said. The company recorded cash flow from operations of $90.2 million for 3Q99, and as of Sept. 30, Oxford had $1.1 billion in current cash and marketable securities and more than $230 million in cash in the parent company.