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Health Column

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By BEN SULLIVAN

Staff Reporter

It was a long time coming. And management could have been forgiven, thinking it an April Fool’s Day prank. But L.A. Care, the public half of Los Angeles County’s “two-plan model” for shifting Medi-Cal patients into managed care, received full licensing last week from the California Department of Corporations.

A partnership of one public and six private HMOs, L.A. Care had opened its doors for business last Tuesday, but with state approval to work with just one of those partners Blue Cross of California Inc. The plan’s full HMO license came at opening day’s end, by which point L.A. Care had signed up just three members. The small number of enrollees was due to delays in state notification of Medi-Cal recipients, according to L.A. Care spokesman Keith Malone.

By the end of this month, the plan is expected to enroll 200,000 or more members. Ultimately, L.A. Care is expected to have more than 600,000 members.

Originally expected to open for business in December, the plan has faced repeated delays in gaining state approval, and at one point needed a loan from partner Kaiser Permanente to meet payroll and other expenses.

Foundation Health, the private half of the two-plan model, is expected to begin operations this summer. When up and running, the Foundation plan and L.A. Care will compete to provide care for L.A.’s roughly 1.5 million Medi-Cal-eligible patients.

At Long Last

Health Systems International and Foundation Health Corp. officially tied the knot last week, as the California Department of Corporations gave final approval to the $1.3 billion merger of equals.

The new company, Foundation Health Systems Inc., is now the fourth-largest publicly traded managed care company, with 5 million members in 17 states. On a pro-forma basis, the Woodland Hills-based company had more than $7 billion in 1996 revenues.

No announcements about layoffs had been made as of late last week, though the company has indicated it expects to realize $110 million in annual cost savings by eliminating overlapping positions.

The merger had been opposed by a number of consumer advocate groups who saw the deal as a potential threat to competition and patient choice in the California managed care industry. Department of Corporations Commissioner Keith Bishop, however, said the merger would not have that effect.

“After five months of intensive legal and factual review, I believe the department has taken unprecendented steps to ensure that the interests of health care consumers are protected,” Bishop said.

In fact, while HSI and Foundation have merged, their respective HMOs cannot be consolidated into a single plan without further state approval, and the new company must obtain state approval before making any senior management changes.

HSI Chief Executive Malik Hasan will serve as president of Foundation Health in its first year, at which point HSI President Jay Gellert will take the mantle.

Vive la France

Los Angeles-based Diagnostic Products Corp., one of the largest makers of immunodiagnostic testing products, said it will buy a distribution wing of its French partner, Paris-based Behring Diagnostic S.A.

The L.A. firm makes testing kits to measure levels of microorganisms, hormones, drugs and other medically important substances in body fluids and tissues. It sells the kits to hospitals and physician practices. Until now, the French company has distributed Diagnostic’s testing products in France, and will continue to sell some of its goods. But with the acquisition, Diagnostic will take over direct sales of its allergy testing products, the company’s most popular line in France.

Diagnostic also said it will begin overseas distribution of a new chemical screening test for pancreatic cancer. The test, which Diagnostic licensed from researchers at the University of Liverpool, England, is expected to compete with traditional tests that involve more-costly abdominal CAT scans. A CAT scan typically costs $600 to $800, whereas the Diagnostic blood test will retail for roughly $20, according to Diagnostic spokesman Michael Ziering.

Pancreatic cancer claims roughly 180,000 lives annually around the globe.

Pregnancy brain

Researchers at the University of Southern California say they have conclusive evidence of a phenomenon midwives and obstetricians have reported anecdotally for years: That pregnant women get dumber as they approach delivery.

So-called “pregnancy induced slowness” describes the difficulty many pre-delivery patients have in recalling instructions and a general feeling reported by women of not being in top intellectual form around the time of delivery.

In cognitive tests by USC neural science researchers, women performed 15 to 20 percent worse when pregnant than after delivery. Researchers observed drops in women’s ability to recall lists of words and objects. “They tended to be easily distracted and to have notable difficulty in tracking more than one piece of information at a time,” said lead researcher Galen Buckwalter.

While the findings may not have come as a total surprise, they do seem curious in light of one hormonal reaction to pregnancy.

“The hormone estrogen generally improves brain functioning and estrogen levels increase drastically during pregnancy,” he said. A soup of other hormones, however, also increases. So one of those other hormones, or a combination of them, may be causing the effect, he said.

Ben Sullivan is a reporter for the Los Angeles Business Journal and covers the health care industry.

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