Medical Mega-Mergers

NEW YORK: The rapid consolidation of American health care under control by giant companies took two large steps forward as the Federal Trade Commission approved a mammoth, multi-billion dollar merger between two of the country's largest HMOs, and the worlds largest for-profit hospital group announced the $1.3 billion purchase of another managed care provider. For $2.1 billion in cash and stock, California-based managed care giant PacifiCare Health Systems will acquire FHP International. Nashville-based Columbia/HCA, an aggressive for-profit hospital chain that has grown rapidly by acquiring hospital groups and other medical enterprises, will absorb managed care provider Value Health. Critics charge that patients could end up adrift as health care takes on a corporate cast. In California, which has the nation's largest number of HMO subscribers, the PacifiCare-FHP deal will mean that patients will be left with just three HMO choices PacifiCare, Kaiser Permanente or Health Systems International. That merger, which will affect some 4 million HMO members in total, "will clearly undermine competition in the managed care marketplace and sentence consumers to fewer choices, fewer services and the potential for greater price fixing and unfair business practices," fumed Harvey Rosenfield, founder of Consumers for Quality Care, a California-based anti-HMO organization which is challenging the FTC approval. In a written statement Wednesday, PacifiCare president Alan Hoops dismissed such fears as totally unfounded, claiming that the deal will result only in major cost savings from the larger patient base. Despite a solid stamp of approval from investors, which sent the two HMOs' stock soaring, though, the end is not yet in sight. The deal still has one additional hurdle to jump: approval by the California Department of Corporations, which has scheduled a hearing on the merger for late January.