Alan Hoops, a key figure in Orange County’s managed care sector, is back at a new company where he hopes to put into play “some long-formulated ideas and concepts about Medicare and better ways to do it.”
Hoops, a 28-year OC resident, is chief executive of Cerritos-based CareMore Health Plan, an insurer that provides health plans for people covered by the federal government’s Medicare system for seniors.
The 59-year-old executive and several associates, working as Crystal Cove Partners, joined with JPMorgan Partners, the private equity arm of JPMorgan Chase & Co., to buy CareMore.
Hoops is best known as the longtime chief executive of PacifiCare Health Systems Inc., now a Cypress-based unit of Minnesota’s UnitedHealth Group Inc.
“I was really looking for the right opportunity to re-enter the Medicare business with a company that I thought had a business model that was appropriate to be successful under the rules of (Medicare reform),” Hoops said.
He’s referring to the Medicare Modernization Act of 2003, which gave health plan operators some $14 billion over five years to create programs to entice seniors into private sector alternatives to traditional government Medicare plans.
The act “had some provisions in it that spoke to business and some fundamental improvements in how the government (engaged) the private sector,” Hoops said.
While at PacifiCare, Hoops played a big role in starting the company’s Secure Horizons Medicare plan.
Hoops, a graduate of the University of California, Los Angeles, and the University of Washington, joined what then was Pacific Health Systems in 1977 as an associate director.
By 1993, Hoops became chief executive, succeeding his mentor, Terry Hartshorn, the company’s cofounder.
During Hoops’ seven years at the helm, PacifiCare grew fivefold with yearly revenue of more than $10 billion.
Then in late 1999, amid Wall Street anxiety about PacifiCare’s reliance on Medicare, Hoops left in a management shake-up.
PacifiCare then went through a rough spot before a comeback led by former chief executive Howard Phanstiel brought about last year’s $9 billion-plus acquisition by UnitedHealth.
The need for economies of scale for managed care companies,which act as intermediaries between patients and doctors to control costs,made it “not the least bit illogical that a company like United would find a company like PacifiCare an attractive merger partner,” Hoops said.
“But to say I would have predicted it, that would be an overstatement,” he said.
CareMore, which has about 23,000 plan enrollees and covers Orange and Los Angeles counties, is looking to grow, Hoops said.
It offers what Hoops calls a “competitive” benefits package; special needs plans for “the frail elderly,” including skilled nursing care; a plan for low-income seniors who are eligible for Medicare and California’s Medi-Cal plans; and another for those with chronic health conditions.
CareMore plans to enter other markets with various partners, which could include hospitals, medical groups and other Medicare health plan providers, Hoops said.
The same consolidation that brought UnitedHealth to PacifiCare makes CareMore a small fish. The likelihood of an acquisition or a public offering is “quite high,” he said.
“We’re a small company that operates in an industry of giants,” he said. “The likelihood that a small company like CareMore will survive forever as an independent company I’m not sure if any company can make that statement.”
Before coming to CareMore, Hoops had a variety of business activities. Those included starting Crescent Bay Partners and cofounding Chairs Benu Inc., an employee benefits company, and Enwisen Inc., a Bay area company that provides Internet-based human resources, benefits and compensation software.
