Retooling PacifiCare Plans Move to Cypress
By VITA REED
Santa Ana-based PacifiCare Health Systems Inc. plans to end 2002 with its headquarters in a new city,Cypress.
The healthcare services provider is doubling up its corporate operations and its California business in Cypress as part of a larger bid to improve profitability and efficiency, spokesman Dan Miller said.
Chief Executive Howard Phanstiel and other top officials are expected to move to Cypress later this year, Miller said. PacifiCare of California, a health maintenance organization that makes up the company’s largest unit, already is in Cypress about 10 miles from PacifiCare’s Santa Ana base.
PacifiCare’s customer service and technology departments also are set to move to a complex of buildings on Katella Avenue in Cypress, he said.
With 2001 sales of $11.8 billion, PacifiCare easily will be the largest public company based in Cypress, which is known mostly as a hub for Japanese companies. The city’s largest publicly traded company now is Universal Electronics Inc. with sales of $120 million last year.
PacifiCare plans to keep what’s now its headquarters at 3120 Lake Center Drive for other uses, Miller said.
“We will have other functions at Santa Ana, which we will be able to better determine closer to the consolidation later on in the year,” he said.
PacifiCare officials “believe we could save substantially each year in real estate expenses” by moving some functions to Cypress, Miller said.
Miller didn’t offer a specific amount the company hopes to save in the move, though PacifiCare has said it expects to save up to $90 million a year as part of its overall “profit improvement program.”
That program is expected to result in the loss of some 1,300 jobs across PacifiCare. In Orange County, the company employs about 4,400 people.
PacifiCare is retooling amid a backlash against HMOs by doctors, hospitals and some consumers, as well as a fall off in government Medicare spending.
In another move, PacifiCare tapped James Frey to lead PacifiCare of California. Frey, who had been senior vice president of branding and strategic initiatives, replaces Chris Wing, whom PacifiCare said resigned to pursue other interests.
Frey, who joined PacifiCare in 1997 after it acquired FHP International Corp., also has been president and chief executive of PacifiCare of Nevada. Most recently, he was in charge of PacifiCare’s efforts to position itself beyond its core HMO offering.
PacifiCare Health Plans Chief Executive Brad Bowlus noted that in announcing Frey’s appointment. Frey reports to Bowlus, also a PacifiCare corporate senior vice president.
“Having launched our branding initiatives companywide, James understands the challenges facing the healthcare industry,” Bowlus said. “In the future, consumers will assume greater responsibility as purchasers of health care. James has spent much of last year developing brand strategies that focus on consumers and how to best meet their needs.”
PacifiCare of California counts some 2.1 million commercial and Secure Horizons Medicare HMO members. But PacifiCare of California and other HMOs have been embroiled in a series of contracting imbroglios, including a spat some 18 months ago with Orange-based St. Joseph Health System that centered on disagreements over rates paid for providing healthcare.
