<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __ )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
Pennsylvania Physician Healthcare Plan, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
_______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
_______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________
(5) Total fee paid:
_______________________________________________________________________
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
_______________________________________________________________________
(2) Form, Schedule or Registration Statement no.:
_______________________________________________________________________
(3) Filing Party:
_______________________________________________________________________
(4) Date Filed:
_______________________________________________________________________
<PAGE>
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
651 EAST PARK DRIVE
HARRISBURG, PENNSYLVANIA 17111
--------------------------
DEAR CLASS A SHAREHOLDER:
We previously sent you a Notice of Special Meeting of Class A and Class
B Shareholders, Proxy and Proxy Statement, dated October 21, 1998 (the "Proxy
Statement") relating to the Special Meeting of Class A and Class B Shareholders
(the "Meeting") of Pennsylvania Physician Healthcare Plan, Inc., a Pennsylvania
corporation (the "Company"), to be held on Friday, December 4, 1998, at 7:00
p.m. local time, at the offices of the Company, 651 East Park Drive, Harrisburg,
Pennsylvania or any adjournment or postponement thereof.
As a result of developments since the time of the mailing of the Proxy
Statement, we are providing you with the attached Supplement to Proxy Statement
(the "Supplement"), which includes an additional proposal for your
consideration. The Supplement should be read in conjunction with the Proxy
Statement. Also enclosed is a proxy card which includes the additional proposal.
In order to provide the Company's shareholders more time to consider
the matters set forth in the Proxy Statement and the Supplement, the Company
expects to adjourn the Meeting scheduled for December 4, 1998 and reconvene on
Saturday, January 9, 1999 at 10:00a.m. local time at the offices of the Company.
We would like to remind you that whether or not you plan to attend the
Meeting, you should sign, date and return both the enclosed proxy card and the
proxy card sent to you along with the Proxy Statement. For those shareholders
who have not yet completed and mailed the proxy card sent with the Proxy
Statement, an additional proxy card is also enclosed. In particular, we remind
you that, as set forth in the Proxy Statement, the Board of Directors has
determined it to be in the best interests of the Company and its shareholders to
amend certain provisions of the Company's Bylaws to require the affirmative vote
of 2/3 of the votes cast by all shareholders entitled to vote in order to
approve the acquisition of all or substantially all of the entire business of
the Company by another person through a merger, sale or other disposition by the
Company of its assets. Approval of the amendment to the Company's Bylaws will
remove the onerous 90% voting requirement to approve the sale or transfer of the
Company's business, but will still require a supermajority vote of 2/3 of the
Company's shareholders in those circumstances. Because approval of this matter
requires the affirmative vote of 90% of the votes cast by all shareholders
entitled to vote, and approval of the additional proposal to which the
Supplement relates requires the affirmative vote of a majority of the Company's
Class A Shares entitled to vote thereon, it is imperative that your vote be
counted. Therefore, if you have not done so already, please remember to sign,
date and return the proxy card sent to you earlier (or the additional copy of
that proxy card enclosed herewith) along with the proxy card also enclosed and
relating to the additional proposal. All proxy cards received by the Company at
the Meeting (as adjourned to January 9, 1999) or at anytime prior thereto will
be counted.
THE BOARD OF DIRECTORS HOPES THAT YOU WILL FIND IT CONVENIENT TO ATTEND
THE SPECIAL MEETING IN PERSON, BUT WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE
SIGN, DATE AND RETURN THE ENCLOSED PROXY TO ASSURE THAT YOUR SHARES ARE
REPRESENTED AT THE SPECIAL MEETING. RETURNING YOUR PROXY DOES NOT DEPRIVE YOU OF
YOUR RIGHT TO ATTEND THE SPECIAL MEETING AND VOTE YOUR SHARES IN PERSON.
We apologize for any inconvenience that this additional proposal may
have caused you.
By Order of the Board of Directors
/s/ Krista G. Maddigan
----------------------------------
Krista G. Maddigan, Secretary
Harrisburg, Pennsylvania
November 20, 1998
<PAGE>
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
651 EAST PARK DRIVE
HARRISBURG, PENNSYLVANIA 17111
--------------------------
SUPPLEMENT TO PROXY STATEMENT
--------------------------
SPECIAL MEETING OF CLASS A AND CLASS B SHAREHOLDERS
TO BE HELD ON DECEMBER 4, 1998
This Supplement to Proxy Statement is being furnished in connection
with the solicitation by the Board of Directors of Pennsylvania Physician
Healthcare Plan, Inc., a Pennsylvania corporation (the "Company"), of proxies
for use at the Special Meeting of Shareholders of the Company to be held on
Friday, December 4, 1998, at 7:00 p.m. local time, at the offices of the
Company, 651 East Park Drive, Harrisburg, Pennsylvania or any adjournment or
postponement thereof (the "Meeting"). In order to provide the Company's
shareholders more time to consider the matters set forth in the Proxy Statement,
dated October 21, 1998, relating to the Meeting (the "Proxy Statement") and this
Supplement, the Company expects to adjourn the Meeting scheduled for December 4,
1998 and reconvene on Saturday, January 9, 1999 at 10:00a.m. local time at the
offices of the Company.
The information contained herein supplements the Proxy Statement
At the Meeting, in addition to those matters set forth in the Proxy
Statement, holders of shares of the Company's Class A Common Stock ("Class A
Shares") will be asked to approve a reduction from $9.6 million to $5 million in
the amount of funds which must be retained by the Company and used only after it
is licensed in Pennsylvania as a health maintenance organization ("HMO") (the
"Proposal").
This Supplement to Proxy Statement is dated November 20, 1998 and is
first being mailed to shareholders along with the related form of proxy on or
about November 24, 1998.
If a proxy in the accompanying form is properly executed and returned
to the Company in time for the Meeting and is not revoked prior to the time it
is exercised, the shares represented by the proxy will be voted in accordance
with the directions specified for the matter listed on the proxy card. Unless
the proxy specifies that it is to be voted against or is an abstention on a
listed matter, proxies will be voted FOR the Proposal.
Revocability of Proxy
Any holder of Class A Shares who has given a proxy has the power to
revoke such proxy at any time before it is exercised at the Meeting. A proxy may
be revoked by delivery of written notice to the Secretary of the Company, by
execution of a later proxy or by voting shares in person at the Meeting. If not
revoked, all Class A Shares represented by properly executed proxies will be
voted as directed therein.
Securities Entitled to Vote; Vote Required
Only Class A Shareholders of record on October 3, 1998 are entitled to
notice of and to vote at the Meeting. Class B Shareholders are not entitled to
vote on the Proposal. Each Class A Share is entitled to one vote on the
Proposal. Only holders of record of Class A Shares who are practicing physicians
(medical doctors or doctors of osteopathy), podiatrists and oral surgeons (or
their qualified retirement plans) may vote on the Proposal (see Exhibit A to the
Proxy Statement for certain definitions of these terms). Each holder of Class A
Shares is entitled to only one vote, regardless of the number of Class A Shares
held.
<PAGE>
Approval of the Proposal requires the affirmative vote of a majority of
the Class A Shares entitled to vote on such matter. Accordingly, for the purpose
of the proposal, abstentions will have the effect of negative votes.
THE PROPOSAL
Background
From July, 1995 through March, 1996 the Company sold 4,087 shares of
its Class A voting common stock and 1,074 shares of its Class B non-voting
common stock, exclusively to practicing physicians residing in Pennsylvania. The
Company received net proceeds from the offering of $21,220,829. A portion of the
net proceeds were to be used in connection with the Company's application for a
license to operate as a health maintenance organization ("HMO"). As a condition
to approval of the offering by the Pennsylvania Securities Commission (the
"PSC"), the Company agreed to reserve approximately $9,691,000 of the net
offering proceeds for post-HMO licensure activities (the "Post-Licensure
Funds"), including the funding of net worth and deposit requirements and initial
operating deficits. These funds could not be expended by the Company unless and
until the Company obtained a license from the Commonwealth of Pennsylvania to
operate an HMO. In the event that the Company were to expend all of its
available funds, other than the Post-Licensure Funds, and had not obtained its
HMO license, the terms of the offering require the Company to distribute the
Post-Licensure funds to its shareholders (subject to deduction for any claims of
creditors); provided, however, that the Company may elect, with the consent of a
majority of the Class A Shares entitled to vote, to retain a specified portion
of the Post-Licensure Funds for a further period of time, in order to continue
to seek its HMO license.
The Company already has a license to operate a risk-assuming preferred
provider organization ("PPO") and pursuant to this license, the Company operates
a managed care organization that offers a preferred provider organization plan
in 18 contiguous counties in Pennsylvania to employers and other group
purchasers of health care plans, such as unions, trusts, governments and trade
associations, as well as to individuals. The PPO now covers over 8,000
subscribers.
The Company expended substantial funds in obtaining its PPO and HMO
licenses, organizing and promoting its PPO and creating an administrative
structure to manage and operate both. As of September 30, 1998, the Company's
net worth was approximately $11.3 million. Although the Company is optimistic
that an HMO license will issue soon, continuing operating costs could reduce its
net worth to the $9.69 million threshold before that time.
The Proposal
The Board of Directors of the Company has determined that it would be
in the best interests of the Company and its shareholders for the holders of
Class A Shares to reduce the amount required for retention by the Company as
Post-Licensure Funds to $5,000,000 and allow any excess to be employed by the
Company in the operations of its PPO and other activities.
Reasons for the Proposal
The Company was organized to own and operate an HMO. On November 27,
1996 the Company filed an application with the Pennsylvania Department of Health
and the Pennsylvania Insurance Department (together, the "Departments") for an
HMO license. At the time of the Company's stock offering, its plan of operation
projected receipt of an HMO license within 2 years. As discussed below, the
Company now expects to receive its HMO license in the first quarter of 1999.
-2-
<PAGE>
The Departments' review of an HMO application is extremely
comprehensive and the approval process can extend for several years from the
time of filing, depending on a number of factors, including requests for further
information, compilation of a provider network satisfactory to the Department of
Health, approval of all necessary forms and agreements, workload at each
Department, changes in applicable laws and regulations and scheduling delays.
The Company encountered unforeseen delays in assembling its provider network
because of established provider-payor relationships, restrictive employment
practices and competing provider-sponsored health plans.
To date the Company has contracted with 17 hospital providers and over
696 physician providers for its initial HMO products and is in the process of
credentialing the physician providers. It has engaged providers for other
services, such as vision, mental health, pharmacy, laboratory and home health.
Additionally, the Company has received approval for its forms and procedures,
including subscriber agreements, provider agreements, and utilization management
and quality improvement policies covering its HMO and has obtained approval for
its HMO provider networks in Dauphin, Berks and Cumberland Counties. The Company
is scheduled to undergo a final site visit from the Pennsylvania Department of
Health for those counties in December, 1998 and anticipates that a final site
visit from the Pennsylvania Insurance Department will occur in January, 1999,
following which the Company expects to receive its HMO license in the first
quarter of 1999. The Company believes that, upon receipt of its HMO license and
commencement of operations as an HMO, cash flows from the HMO and PPO operations
will substantially improve and are projected to be sufficient to maintain the
prescribed net worth.
To ensure that the Company can continue to operate in its present mode,
expand its PPO and prepare for implementation of the HMO, the Board of Directors
believes that it is in the best interests of the Company and its shareholders
for the holders of Class A Shares to approve a reduction in the amount of funds
required to be retained by the Company as Post-Licensure Funds from
approximately $9.69 million to $5 million. The resolution approving this action
is set forth on Exhibit A to this Supplement.
Certain Effects of the Proposed Action
The retention by the Company of $5,000,000 of the Post-Licensure Funds
will limit the amount of Post-Licensure Funds available for distribution to the
Company's shareholders in the event that the Company does not obtain its HMO
license. In the event that the shareholders were to approve the Proposal and the
Company nevertheless, were unable to obtain its HMO license after expending all
available funds, the amount available for distribution to shareholders would
have been reduced by approximately $4,691,000, plus amounts owed to creditors.
At such time as the Company receives its HMO license, all Post-Licensure Funds
immediately become available for use by the Company in the conduct of its
business affairs.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" A
CHANGE IN THE AMOUNT OF POST-LICENSURE FUNDS REQUIRED TO BE RETAINED BY THE
COMPANY TO $5,000,000.
-3-
<PAGE>
EXHIBIT A
RESOLUTION AUTHORIZING THE
RETENTION OF POST-LICENSURE FUNDS
IN THE SPECIFIED AMOUNT
RESOLVED, that the amount of funds required to be retained by the Company for
post-HMO licensure activities be reduced from approximately $9,691,000 to
$5,000,000.
-4-
<PAGE>
PROXY
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
This Proxy is Being Solicited by the Board Of Directors
in connection with a Special Meeting of
Class A and Class B Shareholders to be held December 4, 1998
The undersigned hereby appoints Gary C. Brown and Edward W. Gerner, and
each of them, Proxies for the undersigned with power of substitution, to vote as
designated below all the shares of the undersigned at the Special Meeting of
Class A and Class B shareholders of Pennsylvania Physician Healthcare Plan, Inc.
to be held at 651 East Park Drive, Harrisburg, Pennsylvania on December 4, 1998,
at 7:00 p.m., or any adjournment or postponement thereof, all as more fully
described in the Notice of Special Meeting and Proxy Statement, receipt of which
is hereby acknowledged.
1. Approval of the retention by the Company of $5,000,000 of HMO
Post-Licensure Funds:
[ ] FOR APPROVAL OF [ ] WITHHOLD [ ] ABSTAIN
RETENTION OF POST- AUTHORITY TO VOTE
LICENSURE FUNDS IN THE FOR APPROVAL OF
SPECIFIED AMOUNT RETENTION OF POST-
LICENSURE FUNDS IN
THE SPECIFIED AMOUNT
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
The undersigned approves all that the Proxies or their substitutes
shall do by virtue hereof.
This Proxy, when properly executed, will be voted as directed herein,
but if no direction is given, this Proxy will be voted FOR Approval of the
retention by the Company of $5,000,000 of HMO Post-Licensure Funds.
The undersigned, intending that the Company will rely thereon,
certifies that the undersigned is a Pennsylvania practicing physician (medical
doctor or doctor of osteopathy), podiatrist or oral surgeon, or a Qualified
Retirement Plan, and is voting only one Class A Share.
Dated:_________________, 199__
____________________________________
Signature of Shareholder
____________________________________
Signature of Shareholder
(Please sign exactly as your name appears
hereon. Executors, administrators or
trustees should so indicate when signing.
If Shares are held by more than one
person, all must sign.)
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY
<PAGE>
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
November 20, 1998
TO: Our Shareholders
FROM: Gary C. Brown, M.D., Chairman of the Board
RE: Supplement to Proxy and Meeting Date Change
We recently sent you a proxy statement for a special shareholders' meeting and a
separate question and answer sheet. The proposals to be voted upon at the
meeting are designed to prepare our growing Company for the future. From the
outset, it has been our intent to build an organization that assures physician
input. In order for this to be more than good intentions, your participation is
critical. While most of the issues the Board will bring to your attention
require a simple majority vote, two areas differ. The first concerns any changes
in ownership structure; the second, a technical issue involving the expenditure
of Company funds.
Events such as a merger, sale or a technical corporate reorganization require
approval of 90% of all voting shareholders, an almost impossible burden. This
requirement allows a 10% minority veto power over these types of issues.
Similarly, a 90% vote is necessary to change this requirement. The Board
believes that this issue is better determined by a two-thirds super majority and
proposed in Agenda Item 2 of the meeting to amend the Company's By-Laws to
effect this change. If you do not return your proxy or abstain from voting on
Item 2, your action has the same effect as a no vote. If you voted no, but may
wish to reconsider, have not yet returned the proxy card or abstained from
voting on Item 2, we are enclosing an additional white proxy card for you to
complete. We hope you will vote in favor of this proposal and urge others to do
so. You will thereby enable your fellow physicians on the Board, yourself and
all shareholders the flexibility to respond to today's rapidly changing health
care environment.
When we first received approval to raise funds for our Company, we agreed to set
aside $9.6 million from the offering proceeds, not to be spent until we received
our HMO license. Although we expected to seek an HMO license first, as we began
our Company, it was clear that we could start operations, and generate cash
flow, much more quickly with a PPO license while we continued to apply for an
HMO license. We accomplished our first goal and now have an operating PPO in 18
counties covering over 8,000 lives. In our most recent billing run, we sent out
invoices for over $1 million in premiums. Our PPO is clearly gaining market
acceptance in a very competitive arena.
<PAGE>
We are still moving forward as rapidly as possible for our HMO license and are
optimistic that it will be issued in the first quarter of 1999. However, it is
possible that the process could move more slowly and we could arrive at the $9.6
million dollar threshold and still be waiting to receive the license. The Board
has, therefore, submitted an additional proposal for your approval to lower the
threshold to $5 million. We are enclosing a blue proxy card for you to complete
with respect to this additional proposal. Its adoption will give us the
flexibility to manage your Company and promote its growth, notwithstanding the
unexpected delays we have met. Approval requires a majority of eligible
shareholders.
In order to give us more time to obtain a full response on these two issues, we
expect to adjourn the meeting scheduled on December 4, 1998 and reconvene on
Saturday, January 9, 1999 at 10:00 a.m. at our offices in Harrisburg.
Accordingly, if you plan to attend the meeting, please join us then, rather than
on December 4. Even if you are planning to attend the meeting, the Board urges
you to complete and mail in your proxy as soon as possible in the enclosed
envelope.
This cannot be a physician directed Company without your participation. We have
already succeeded beyond the level that most of our critics thought possible. We
cannot hope to regain control of the health care system if we do not take an
active part in asserting our vital roles. Please join the other shareholders and
me in proving that physicians still can be the driving force in health care.
On behalf of the entire Board of Directors, I thank you for your support.
Sincerely,
/s/ Gary C. Brown
- --------------------------
Gary C. Brown, M.D., MBA
Chairman of the Board
<PAGE>
WE REQUEST YOUR IMMEDIATE ATTENTION TO THE ENCLOSED MATERIALS. THIS IS NEW
INFORMATION. PLEASE REVIEW THE PROXY STATEMENT AND SIGN, DATE AND RETURN THE
PROXY CARD(S) IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE TO ENABLE US TO MEET
THE QUORUM AND VOTING REQUIREMENTS FOR THE SPECIAL MEETING. ALSO NOTE THE
INFORMATION ON THE PLANNED ADJOURNMENT OF THE MEETING ON DECEMBER 4, 1998 AND
THE RECONVENED MEETING PLANNED FOR JANUARY 9, 1999.
<PAGE>
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
November 9, 1998
TO: Our Shareholders
FROM: Gary C. Brown, M.D., Chairman of the Board
RE: Special Meeting of Class A and Class B Shareholders
I and the staff of PPHP have received a number of questions from
shareholders about the three items which are under consideration at the
Company's Special Meeting called for December 4, 1998. The original structure of
the Company served us well as we introduced our products to the market. Now that
we have passed this initial phase, we need to look forward with a structure that
will allow us to respond to market forces and opportunities. The board believes
that these changes will allow for that flexibility. We would be pleased to speak
directly with any of you who have questions, however, I would like to address
the most common ones asked.
Q. Does the Company need more money?
A. The Company currently has sufficient funds to continue with its current
operations. We have enjoyed much success in enrolling members in our
PPO and believe we will soon be receiving an HMO license for several
counties. To expand our service areas for our PPO and HMO beyond our
initial capitalized market of Central Pennsylvania, we will need
significantly more capital.
Q. Why does the Company need 20,000,000 shares of Common Stock? Is it
going to issue them all now?
A. The Company would like the capability to sell and issue more shares of
stock to meet its capital needs. This does not mean that the Company
plans to issue all 20,000,000 shares of Common Stock. If all of the
proposals are approved, it will need shares available to implement the
conversion of existing Class A and Class B shares to Common Stock and
to issue shares under the Stock Option Plan. The Board is also
considering several alternatives for capital raising to meet our
longer-term objectives. By authorizing this stock now, we will be in a
position to respond more rapidly as opportunities or needs arise.
Q. Why does the Company need a Stock Option Plan?
A. Stock options are valuable tools for recruitment, retention and
motivation of qualified employees and others who can contribute
materially to the Company's success. If the results of our employees'
efforts prove successful and increase the value of our Company, the
employees (who will be entitled to a significant amount of the credit
for that success) will be able to share in it. At this point, stock
options are essential to retaining those who have proven to be
successful Conversely, if the Company does not grow and increase in
value, the employee options will be worthless.
<PAGE>
Q. Will the conversion of Class A and Class B shares have a negative tax
effect on me?
A. The Company has been advised by its counsel that the conversion of
Class A and Class B shares into Common Stock will be a tax free
exchange, and there will be no taxable gain or loss to the holders of
those shares as a result of the conversion.
Q. How will the conversion of Class A and Class B shares affect my voting
rights?
A. Currently, each holder of Class A shares has only one vote, regardless
of the number of shares held, and the Class B shareholders have no
voting rights. The conversion will result in a much more democratic
system whereby each share of common stock will have one vote, as is the
usual case for other companies. So, for each share of Class A stock
that you now own, you will have 400 votes and for each share of Class B
stock, 100 votes.
Q. What is the purpose of the amendments to the Bylaws of the Company?
A. The principal amendments will change a provision which requires 90%
shareholder approval for a proposed change of ownership structure of
the Company. Obtaining 90% shareholder approval is virtually impossible
for any Company whose stock is widely held. Changing this provision
will allow the Company to take an action favored by a large majority
(or more) which now can be frustrated by a small majority (only 10%).
For example, it will enable us (if 2/3 of us choose to do so) to
combine with other similar companies to build a larger and stronger
enterprise.
Q. Why should the Company admit non-physicians as shareholders?
A. The Company already has shareholders who are not physicians, but they
can't vote. If we want to speak with a louder voice on matters
affecting health care, we gain credibility if we have a wider base.
Even if we sell some stock to other health care professionals, at least
2/3 of our Board members must be physicians.
Q. Why has the Company proposed such a large stock split - 400 shares for
one share of Class A Common and 100 shares of each share of Class B?
A. We wish to provide an exit strategy for shareholders who want to sell
some or all of their investment. We have spoken with an investment
banker about their making a market in our stock after the stock split.
The stock split will create enough shares to have a market and lower
the price to the $15-$30 range, which would be more attractive to
investors. Nevertheless, we intend to retain the restrictions on voting
our stock by limiting voting to physicians and other health care
professionals, employees and former employees of the Company.
Q. Won't the changes proposed make it easier for a hospital system or
large insurance Company to take over the Company?
A. We've been very aware of the principles on which our Company was
founded. We intend to maintain it as a strong voice for physicians.
Although we will welcome them to the table, we do not intend to permit
outside entities such as hospitals or other insurance companies to
dominate or control our Company. We can do this by limiting who can be
voting shareholders and who can serve on our Board.
<PAGE>
Q. How is the Company doing?
A. The Company is right on schedule with our revenue projections. As of
today we have 8,400 members and have indications that we could finish
the year around 10,000. Our expenses are also keeping in line with our
projections. We have over fifty employees and are getting excellent
marks for our service from our current customers. The broker community
has also been very responsive and requests for quotes have been
steadily increasing. Even our ad campaign won a Gold Addy award from
the Ad Club of Central Pennsylvania against national competition. We
are currently awaiting a visit from the Department of Health in order
to obtain our HMO license. We hope to have this by early next year but
our success in the PPO has more than made up for the delay.
We urge you to attend our meeting if you wish to continue discussing
any of these questions. Even if you do plan to attend, it is important that you
mark your proxy and return it promptly to the Company in the envelope provided
so that we can obtain as large a response as possible. Please contact the
Company at 1-800-671-7747 if you require an additional proxy or have any other
questions about the meeting.
<PAGE>
PROXY
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
This Proxy is Being Solicited by the Board of Directors
in connection with a Special Meeting of
Class A and Class B Shareholders to be held December 4, 1998
The undersigned hereby appoints Gary C. Brown and Edward W. Gerner, and
each of them, Proxies for the undersigned with power of substitution, to vote
as designated below all the shares of the undersigned at the Special Meeting of
Class A and Class B shareholders of Pennsylvania Physician Healthcare Plan,
Inc. to be held at 651 East Park Drive, Harrisburg, Pennsylvania on December 4,
1998 at 7:00 p.m., or any adjournment or postponement thereof, all as more
fully described in the Notice of Special Meeting and Proxy Statement, receipt
of which is hereby acknowledged.
1. Approval of the retention by the Company of $5,000,000 of HMO
Post-Licensure Funds:
/ / FOR APPROVAL OF RETENTION / / WITHHOLD AUTHORITY TO VOTE / / ABSTAIN
OF POST-LICENSURE FUNDS IN FOR APPROVAL OF RETENTION OF
THE SPECIFIED AMOUNT POST-LICENSURE FUNDS IN THE
SPECIFIED AMOUNT
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Please see other side)
The undersigned approves all that the Proxies or their substitutes shall
do by virture hereof.
This Proxy, when properly executed, will be voted as directed herein, but
if no direction is given, this Proxy will be voted FOR Approval of the
retention by the Company of $5,000,000 of HMO Post-Licensure Funds.
The undersigned, intending that the Company will rely thereon, certifies
that the undersigned is a Pennsylvania practicing physician (medical doctor or
doctor of osteopathy), podiatrist or oral surgeon, or a Qualified Retirement
Plan, and is voting only one Class A Share.
Dated: -----------------------, 199_
-------------------------------
Signature of Shareholder
-------------------------------
Signature of Shareholder
(Please sign exactly as your
name appears hereon. Executors,
administrators or trustees
should so indicate when
signing. If Shares are held by
more than one person, all must
sign.)
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY
