Caremark Gets OK to Purchase 29 Cigna Clinics

LA HABRA —  Caremark International Inc. said Monday that state regulators have approved its purchase of 29 Southland clinics from Cigna Corp., a deal that creates one of the nation’s largest medical groups.

The acquisition nearly quadruples the number of Southern California health-plan members who use Caremark’s medical group, Friendly Hills Healthcare Network in La Habra.

Friendly Hills will serve 400,000 members in Orange, Los Angeles, San Bernardino and Riverside counties, including 300,000 from Cigna, company officials said.

Caremark expects Friendly Hills to contribute more than half of what it anticipates will be $1 billion in revenue this year from its national physician-practice management business, operations similar to Friendly Hills in five other states. Takeover terms were not disclosed.

Cigna will continue to administer its health plans, and its members can go to Friendly Hills facilities.

Caremark handed management of the former Cigna clinics to Friendly Hills because the subsidiary enjoys a national reputation as a leading medical group in managed care, said Lance Piccolo, Caremark’s chief executive.

He pointed out that Friendly Hills has excelled at controlling hospital costs by recording an average of 152 days in the hospital for every 1,000 plan members it serves--less than half the national rate.

He also said that Friendly Hills has won 25 contracts with health-maintenance organizations in California, indicating that it enjoys the confidence of many payers.

Piccolo, who learned about managed care as a health-care products salesmen in Orange County in the late 1960s, also expects to tap Friendly Hills for expertise as Caremark expands its managed-care business.

Locally, the merger should provide Orange County residents with expanded health care, said Dr. Albert Barnett, Friendly Hills’ chief executive.

It adds former Cigna clinics in Santa Ana, Westminster, Los Alamitos, Laguna Hills, Irvine and Orange to give Friendly Hills 16 clinics that patients can use. In Fullerton, where both Friendly Hills and Cigna have clinics, one will be closed.

Next month, the former Cigna clinics will adopt the longer hours of other Friendly Hills clinics, operating from 8 a.m. to 6 p.m. weekdays.

Barnett said that Friendly Hills also intends to increase the number of 24-hour facilities but hasn’t decided where. It now provides such service only at Friendly Hills Regional Medical Center in La Habra.

Within a year, Friendly Hills also plans to computerize patients’ medical records to help ensure continuity of care for patients using different doctors and locations.