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PacifiCare Outgrows HQ, Moves Claims Staff

PacifiCare Health Systems Inc. has moved about 500 workers out of its Cypress headquarters to ease overcrowding.

The healthcare plan operator relocated its claims department down the street to 10801 Walker St., where PacifiCare leased 61,000 square feet of space.

PacifiCare inked a five-year, $6.7 million lease at the new Cypress building. The site is just east of the Los Alamitos Race Track and a short distance from PacifiCare’s headquarters at 5995 Plaza Drive in the Cypress Technology Center.

“We wanted a location in the vicinity,” said Cheryl Randolph, a company spokeswoman.

Sacramento-based Buzz Oates Cos. owns the Walker Street space, according to CoStar Group Inc. PacifiCare and Buzz Oates were represented by Mark Friend, senior vice president and partner in CB Richard Ellis Group Inc.’s Anaheim office and Bob Goodmanson, a senior vice president in the brokerage’s Newport Beach office.

PacifiCare, which counts nearly 3 million members, has been on a roll in recent years after riding out bumpy times earlier this decade when hospitals and doctors revolted over its payment and risk-sharing practices.

The managed care provider has come out with several new health plans, including a preferred provider organization program and a self-directed health plan to capitalize on the nascent consumer-driven healthcare model.

PacifiCare also has launched health programs targeting Latinos, African-Americans, Asian Americans and women as part of a bid to diversify from its HMO business.

PacifiCare’s third-quarter net income jumped 31% to $88 million, versus a year earlier, primarily because it did a better job of controlling medical costs. Third-quarter revenue rose 13% to $3.1 billion.

PacifiCare, whose Secure Horizons Medicare HMO is among the country’s largest plans of its kind with about 730,000 members, counted a market value of $3.9 billion at recent check.

Wall Street analysts expect PacifiCare and its rivals to benefit from President Bush’s re-election earlier this month. Bush and his Republican party, which now controls both houses of Congress, generally favor more private-sector involvement in Medicare, which serves more than 40 million elderly and disabled Americans.

Earlier this year, PacifiCare spokesman Tyler Mason said it didn’t anticipate either the GOP or Democrats “taking benefits away from seniors.”

PacifiCare used its windfall funding from last year’s Bush-backed Medicare Prescription Drug Improvement and Modernization Act to boost drug benefits to Secure Horizons members, among other things.

Still, Mason said PacifiCare was “always mindful” of the possibility that government could eye healthcare funding as a way to balance the federal budget.

Meanwhile, shareholders of Green Bay, Wis.-based American Medical Security Group Inc. are set to vote on a $500 million buyout offer from PacifiCare on Dec. 2.

The Federal Trade Commission granted early termination of the regulatory waiting period for PacifiCare to acquire the preferred provider organization.

PacifiCare expects that deal to close early next year, Randolph said. PacifiCare won’t move American Medical Security from its current base.

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