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Medicare has a far-reaching consumer information program that includes a national toll-free phone number -- 1-800-MEDICARE (1-800-633-4227) or TTY/TDD, at 877-486-2048 -- an Internet site -- www.medicare.gov -- and a coalition of more than 200 national and local organizations to provide seniors more information
John Kao: The fact that seniors are more tech-enabled than ever before, combined with their experiences during the pandemic, is changing their buying expectations. First, they are extremely focused on value and are diligent when shopping for health insurance. They also expect much more timely access to care, and are less tolerant of long wait times, for example, in specialty offices.
Indeed, 48 percent of those polled reported a visit to a mental health professional by someone in their household this year, and more than nine out of 10--91 percent--said they would likely consult or recommend a mental health professional if they or a family member were experiencing a problem.
Acquisition DetailsUnder the acquisition, UnitedHealth would exchange 1.1 shares and $21.50 in cash for each PacifiCare share (Fuhrmans et al., Wall Street Journal, 7/7). The $80.05 per share value represents a 10% premium over the PacifiCare share price as of Tuesday. In total, UnitedHealth would pay $2.2 billion in cash, $5.9 billion in stock and assume $1.1 billion in PacifiCare debt after completion of the acquisition. The combined company would have an estimated $65 billion in annual revenue, with cash flow of more than $6 billion (St. Paul Pioneer Press, 7/7). UnitedHealth officials said that the acquisition would result in $350 million in cost savings over the next three years (Serres, Minneapolis Star Tribune, 7/7). Under the acquisition, PacifiCare would operate as a wholly owned subsidiary of UnitedHealth and maintain headquarters in California, and most of the 10,500 PacifiCare employees would retain their jobs. PacifiCare CEO and Chair Howard Phanstiel would become executive vice president of UnitedHealth. In addition to shareholders, the Antitrust Division of the Department of Justice, the California Department of Managed Health Care and the California Department of Insurance will review the acquisition, which could close late this year (Vrana/Girion, Los Angeles Times, 7/7).
Company StatementsUnitedHealth CEO William McGuire said that the acquisition of PacifiCare was \"not a transaction either company really needed to do\" but would increase efficiency, reduce costs and provide more options to consumers (Wall Street Journal, 7/7). McGuire added, \"The combination will benefit every participant in the health care system, including consumers, employers, physicians and hospitals\" (Shell, USA Today, 7/7). The acquisition also would \"bring the best of both companies forward in a manner that respects each one's unique history and contributions while advancing a national presence that can help address a highly fragmented health care system,\" he said (CQ HealthBeat, 7/7). Phansteil said, \"We have now reached a point where it makes sense for PacifiCare to join with a strong national partner that can help us reach the next level in leveraging technology and scale\" (Los Angeles Times, 7/7).
ReactionSheryl Skolnick, an analyst with Fulcrum Global Partners, said, \"It's safe to say that 99.9% of this deal is driven by the Medicare bill\" (Minneapolis Star Tribune, 7/7). According to the New York Times, analysts have said that UnitedHealth faces risks in the expansion of the number of members enrolled in Medicare because of the potential for \"abrupt changes in deficit-stressed federal budgets\" (New York Times, 7/7). Managed care analyst Carl McDonald of CIBC World Markets said the proposed acquisition of PacifiCare indicates that UnitedHealth has \"bet that the government isn't going to do what it did in 1997 and slash Medicare funding\" (Wall Street Journal, 7/7). McGuire said, \"Admittedly, reimbursement has gone up and down. We expect to be more savvy, more capable with this combination to make sure we operate though any kind of changes. The government is always going to be involved in health care. This issue is how well a company executes in that environment\" (New York Times, 7/7). According to the Journal, the acquisition also would help UnitedHealth in \"its ambitious effort to dominate\" the market for consumer-directed plans. UnitedHealth has more than one million members enrolled in consumer-directed plans, \"far more than any other company,\" the Journal reports (Wall Street Journal, 7/7).
Some ConcernsAccording to the Los Angeles Times, consumer advocates have raised concerns that the acquisition of PacifiCare \"could mean lower payments for doctors and hospitals and more waste in the health care system if conditions are not set by regulators\" because employers might have less ability to negotiate premium rates as the number of health insurers decreases. California Medical Association President-elect Anmol Mahal said, \"These mergers are driven by the health plans' desire to increase market share and profitability, and they are responding to Wall Street's needs rather than Main Street and the needs of patients\" (Los Angeles Times, 7/7). Jerry Flanagan, a spokesperson for the Foundation for Taxpayer and Consumer Rights, said that the group will ask regulators to limit \"big payouts\" to executives as part of the acquisition (New York Times, 7/7). California Insurance Commissioner John Garamendi (D), who will review the acquisition, said, \"My goal, as always, is to provide the maximum protection for California's health care consumers\" (Wall Street Journal, 7/7). UnitedHealth spokesperson Mark Lindsay said that the acquisition would provide consumers with more access to and more options for health care through the establishment of a national network of physicians and hospitals. Lindsay also said that executives would receive compensation based on current employment agreements (New York Times, 7/7).
Folick, 47, has been president of the Cypress-based PacifiCare since April, 1993. PacifiCare of California has more than 900,000 HMO members and is the main business unit of PacifiCare Health Systems Inc., of which Folick is also vice president.
In 2006, CMA presented a lengthy complaint to the DOI from 20 physician members concerning a variety of problems they encountered with Pacificare. Subsequently, the DOI conducted a year-long investigation that resulted in findings of hundreds of thousands of violations of the Insurance Code by Pacificare. In the fall of 2009, the DOI commenced a formal administrative action to prove Pacificare committed approximately 993,000 violations of the insurance laws and regulations. In June 2014, DOI issued a decision to impose penalties of more than $173 million against Pacificare. United Healthcare, which acquired Pacificare in 2005, has appealed the decision to the Orange County Superior Court. The matter continues to be litigated and CMA will continue to stay involved as necessary to ensure that United Healthcare is held accountable for its violations.
We're the most comprehensive health system in the Southeast, including the leading hospitals for adults and children. Whether in one of our seven hospitals or our more than 200 clinics across the region, we're here to make your health care personal.
Headquartered in Green Bay, Wisconsin, with approximately 1,400 employees, AMS provides a variety of individual and small group insurance products to members in 33 states and the District of Columbia through a network of more than 32,000 independent agents. With more than 314,000 commercial PPO members, AMS generated $712 million in total premium revenue in 2003.
The statements in this news release, including those made by Howard Phanstiel and Samuel Miller, that are not historical facts are forward-looking statements within the meaning of the Federal securities laws, and may involve a number of risks and uncertainties. Such forward-looking statements include, but are not limited to, the companies' ability to execute growth strategies, the perceived benefits of the acquisition, the ability to diversify PacifiCare's business, the expectations about the timing and receipt of regulatory and shareholder approvals, statements regarding plans, objectives and expectations with respect to future operations, products and services and future performance and net income guidance for PacifiCare for 2005. These risks and uncertainties include, but are not limited to: those found in documents filed by PacifiCare and AMS, respectively, with the Securities and Exchange Commission; the ability to implement certain growth or diversification strategies; our ability to consummate the merger; the ability to obtain the expected operating efficiencies in the merger within the expected time frame and to integrate successfully into its operations; risks that such integration may be more difficult or costly than expected; revenue following the transaction and other actual results associated with the acquisition of AMS that could differ from the perceived benefits; customer loss and business disruption may be greater than expected in the transaction; and required regulatory approvals for the transaction may not be obtained on a timely basis or may be subject to certain conditions.
PacifiCare Health Systems is one of the nation's largest consumer health organizations with than 3 million health plan members and approximately 10 million specialty plan members nationwide. PacifiCare offers individuals, employers and Medicare beneficiaries a variety of consumer-driven health care and life insurance products. Currently, more than 99 percent of PacifiCare's commercial health plan members are enrolled in plans that have received Excellent Accreditation by the National Committee for Quality Assurance (NCQA). PacifiCare's specialty operations include behavioral health, dental and vision, and complete pharmacy and medical management through its wholly owned subsidiary, Prescription Solutions. More information on PacifiCare Health Systems is available at pacificare.com. 59ce067264