A group of Utah investors, headed by the current head of the Brigham Young University's McDonald Health Center and a Park City investment banker, have filed a letter of intent to purchase the ailing PacifiCare Health System.
Some 115,000 Utahns who are members of the health plan would be affected by the bid by Val H. Christensen, head of the health center, and Kurt Larsen, an investment banker with the Hunter Group, to buy PacifiCare. They are leading a group of anonymous investors."We expect the deal to close within 60 days," said Mike Judson, spokesman for Christensen and Larsen. Judson said financial terms of the agree-ment, which must be approved by the Utah Insurance Department, would not be disclosed.
Under the proposal, members would continue to receive their care through the network of contracted physicians and hospitals, with the University of Utah Medical Center at its core and supported by independent medical associations and physicians.
The recent sale of the Talbert Medical Group, which services a large percentage of PacifiCare members, to the University of Utah Medical Center has helped stabilize PacifiCare business, said Ben Singer of PacifiCare public relations.
"We are pleased to be able to turn the plan over to a capable group of individuals, who are local to the area and who bring astute understanding of the Utah health-care market," said Alan Hoops, president and CEO of Pacifi-Care Health Systems, in a press release from company headquarters in Santa Ana, Calif.
PacifiCare announced in November that it intended to sell its Utah operations and has since announced its intent to exit the Medicare and Medicaid product lines in the state. PacifiCare acquired the Utah plan in February 1997.
Since 1997, when PacifiCare had about 205,000 members, about 90,000 Utah members of PacifiCare have either bailed out of the plan and or left the plan because the company has exited certain lines of business. The company has reported huge losses in Utah - about $58 million in 1997 - and said that because of the dominance of Intermountain Health Care in the market, it is difficult to do business in Utah.
"I think Wall Street will view this favorably as they did when we said we would try to shore up the plan or exit the market through sale. Certainly the sale benefits Utah with a local group of health-care professionals taking over," Singer said.
PacifiCare has sold four of its plans that were part of the original FHP acquisition.
"The challenges of integrating FHP have been more pronounced in Utah than in our other locations and are deserving of the kind of focused effort that we feel will come from this group of investors," Hoops said.
Christensen, who was named head of the BYU Health Center in 1995, has a long history in the health-care business, including former administrator for the Brigham City Community Hospital and Mountain View Hospital in Payson. He served five years as CEO of HCA Doctors Hospital in Sarasota, Fla. In 1992, he became associate regional vice president with FHP Inc. in Salt Lake City.
Judson said that Christensen's time with the health center is winding down and that he had been looking for a new affiliation.
Larsen is a former principal and partner of Aurora Capita Partners, a Los Angeles-based leveraged buyout firm, and helped established Hunter Capital. It is an investment banking firm providing Wall Street-type financial services.