The board of directors of FHP International Corp., Fountain Valley, Calif., parent company of FHP Health Care Utah, has approved a plan to create a physician practice management company that will organize the company's 57 medical centers into one of the largest for-profit physician practice businesses in the United States.
The new company will operate its medical centers under the name of Comprecare Medical Group.Comprecare will include all of FHP's staff operations in Utah, California, Arizona, New Mexico, Nevada and Guam. Regulatory approval for the new company is expected by Jan. 1, 1996.
In connection with forming Comprecare, the FHP board has decided to sell the company's two acute care hospitals in Fountain Valley and South Salt Lake, which have a combined total of 356 licensed beds.
Dee S. Brewer, public affairs administrator for FHP Utah, said the company's seven medical centers in Utah will become part of Comprecare and FHP will contract with Comprecare for health care services for the 180,000 FHP members in Utah.
Regulatory approval for the new company is expected by Jan. 1, 1996.
Comprecare, either directly or through professional medical corporations, will accept fee-for-service patients and provide services to other health maintenance organizations and preferred provider organizations. In the past, FHP's medical centers have served only FHP members.
Involving more than 500 doctors and 95 dentists, Comprecare will have more than $350 million in annual revenue.
At a later date, the physician practice management company may sell shares to the public to raise capital for future expansion and it may spin off a portion of its shares to FHP shareholders.
Jack Massimino has resigned as FHP's chief operating officer and has been elected president of Comprecare. Massimino, who has 20 years of experience in the managed health-care industry, will be a part owner in the new business.
Key primary care physicians employed by Comprecare will have a financial interest in the individual centers in which they practice and their interest will be based upon tenure and position.
The development of Comprecare will entail added operating costs during the six-month period between now and January 1996. These costs include duplicate employees during the transition, separation expenses for displaced employees and the cost of developing new computer systems to handle fee-for-service business and other HMO and preferred provider customers.
As part of the restructuring, FHP's administrative and staff functions at corporate headquarters and the operating units will be reduced by 500 employees, resulting in an annual savings of $15 million.