FHS/Ben/mike1st/mark2nd

By BEN SULLIVAN

Staff Reporter

With the merger of Foundation Health Corp. and Health Systems International now complete, Los Angeles and two other municipalities where the pre-merger companies had their headquarters are firecely lobbying to be selected as the new corporate headquarters site.

“Everyone’s still in the running,” said Foundation Health Systems Inc. spokesman David Olson.

As it stands, FHS is a three-headed entity with Foundation’s pre-existing headquarters in Rancho Cordova, an unincorporated part of Sacramento County, and HSI’s pre-existing dual headquarters in Woodland Hills and Pueblo, Colo.

Each location will continue to serve as a major operational hub of FHS activities, company officials said. But only one, centralized 50-employee headquarters operation will ultimately exist.

The three municipalities are natural front-runners for the new headquarters, and each is preparing a campaign to woo the company.

FHS has retained Fantus Consulting in New Jersey to help assess the proposals and suss out other potential sites.

Despite its relatively small size, the new headquarters would carry significant prestige as the flagship of a Fortune 500 company, and each of the competing municipalities wants to leverage that for slightly different reasons.

For Los Angeles, being selected would be a symbolic close to its recently contentious history with the managed care industry. Five HMOs, including Health System International’s Health Net, threatened earlier this year to move out of L.A. if the city did not revise its business tax downward. Those involved in the talks say an agreement is possible in the next several weeks.

Drawing FHS “would be the icing on the cake,” said Rocky Delgadillo, a member of L.A.’s Business Team, the business-retention unit of Mayor Richard Riordan’s office. Riordan will make a personal appeal to company officials in the next several weeks, Delgadillo said.

Tiny Pueblo’s best chance appears to rest with company President/CEO Malik Hasan’s affinity for the central Colorado town, where he and his family live.

HSI has been Pueblo’s largest corporate resident, and the town is anxious to enhance its image with the new headquarters.

The Pueblo Economic Development Co. is preparing a presentation, though FHS insiders say its chances are slim.

“Pueblo’s a nice little town,” said FHS spokesman Kurt Davis. “But not many people have been to Pueblo or ever will. There are people (at the company) whose social lives would not flourish in Pueblo.”

Sacramento County is preparing a package of incentives to convince the company to locate in Rancho Cordova, said Paul Hahn, the county’s director of economic development. Tax breaks, building permit assistance and other relocation incentives are all goodies Sacramento could offer, Hahn said.

Access Health Marketing Inc., Aetna Life Insurance Co. and Blue Cross of California already have strong presences in Rancho Cordova, Hahn said.

Though L.A., Pueblo and Rancho Cordova see themselves as having a leg up as potential sites, there’s no guarantee one of them will be selected, FHS officials say. Indeed, their very history could play against them.

“On the one hand, you’ve got people already in those sites, but only part of your people is in any one of them,” Davis said.

Niether FHS nor Fantus would identify other cities being considered.

The headquarters will be a nice employment plum from whichever municipality is chosen. Beyond the 50 employees, support services such as accounting, cleaning, restaurants and home and auto sales will have a multiplier effect that could bring the net jobs gain into the hundreds, several sources involved in the decision agreed.

A decision by FHS is expected by summer, Olson said.