IPO

WADE DANIELS Staff Reporter Convinced they can provide superior medical care at a lower cost, a group of local business people is launching a new health insurance plan to serve the San Fernando Valley and Ventura County. Westlake Village-based California Preferred Provider Group Inc. will begin offering service in August and expects to insure some 10,000 people by the end of the year. CPPG patients will be able to choose their own provider from a network of 2,000 doctors at eight hospitals in the San Fernando Valley and Ventura County, essentially giving them PPO (Preferred Provider Organization) service at HMO prices, said Tom Bruncati, chairman and chief executive of the company. The arrangement also will give doctors more control over patient care, he added. “With CPPG, doctors and employers won’t have to deal with large bureaucracies in faraway places when there are medical decisions to be made,” Bruncati said. Dr. Perin Johnson, a cardiologist at the Regional Heart Center of Thousand Oaks, said he decided to become a provider through CPPG out of frustration with the hoops HMOs make doctors jump through before granting approval for patient care. “Under (CPPG’s) system, I could call their medical director for a decision rather than dealing with an HMO committee,” he said. “A lot of people who make decisions at HMOs have never seen a patient. With CPPG it will be doctor to doctor.” In addition, CPPG patients will be able to see any physician in the network, and doctors will be paid on a fee-for-service basis, rather than the capitated system favored by most HMOs. The company held a self-underwritten public offering in June to raise $2 million for the project. Its goal is to raise at least $400,000 by July 31 and the rest by the end of the year. The company refuses to say how much it has raised so far. Bruncati, a former chief executive of the Simi Valley-based aerospace firm Whittaker Corp., said the company will not attempt to expand service beyond the San Fernando Valley and Ventura County area because he wants to keep the operation relatively small and therefore more manageable. He said his experiences acquiring benefits for Whittaker employees helped inspire him to form the company. “There were a lot of challenges in providing good and affordable benefits,” Bruncati said. “I had a notion that a local provider network is the best way to solve the problems with managed care and to improve service.” CPPG’s eight-member board of directors includes Doug Plank, the assistant vice chancellor of Pepperdine University, and Pete Marston, a former executive vice president of Wellpoint Health/Blue Cross of California. The company is one of thousands of smaller U.S. companies that underwrite their own public offerings each year, said Clay Womack, chief executive of the Santa Monica-based Direct Stock Market Inc., which helps small companies raise capital via the Internet. Companies that want to raise less than about $7 million often underwrite their own offerings to save money on investment banker fees.