Watts Health to Spin Off Non-HMO Operations

Watts Health Foundation said it reached an agreement with the state Department of Managed Care to spin off its non-managed-care operations.

Clyde Oden, president and chief executive of Watts Health, said the DMC needed assurance that HMO premiums would stay in that business. Oden said the HMO, which has 100,000 enrollees in Los Angeles, San Bernardino and Orange counties, lost $9 million in 2000 and consequently failed to meet the DMC’s tangible net worth requirement.

Oden said the HMO is taking steps to reduce costs and should post a surplus by the end of the year. The HMO, for example, is negotiating preferred relationships with hospitals to give it a better deal in return for patient volume.

Daniel Zingale, the state’s managed care chief, said his agency is working with the nonprofit health- care provider. “Our concern is for patients,” he said.

Watts Health Foundation will transfer 70 health-care programs, including community health centers and substance abuse programs, to another nonprofit entity that hasn’t been named. Watts, which does business as UHP Healthcare, primarily serves low-income people. Oden said 80% of patients are enrolled in Medi-Cal and 10% are enrolled in Medicare.