SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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| | Preliminary Proxy Statement |_| Confidential, for Use of the Com-
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Physician Healthcare Plan of New Jersey, Inc.
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(Name of Registrant as Specified in Its Charter)
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0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
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<PAGE>
[For the Letterhead of PHPNJ]
November 10, 1997
To Our Stockholders:
I am pleased to enclose information relating to the Special Meeting of
Stockholders of Physician Healthcare Plan of New Jersey, Inc. ("PHPNJ") to be
held at the Hyatt Regency, 2 Albany Street, New Brunswick, New Jersey on
Tuesday, December 9, 1997 at 6:30 p.m.
At the meeting you will be asked to consider and vote upon a proposal
to approve an agreement with Medigroup of New Jersey, Inc. (HMO Blue), which
involves the sale of PHPNJ's HMO and PPO group contracts, provider agreements
and other participation and ancillary services agreements. The transaction is
more fully described in the enclosed Proxy Statement. HMO Blue is the HMO formed
by Blue Cross/Blue Shield of New Jersey, Inc.
Your Board of Directors has approved the agreement after reviewing
several transaction proposals, and believes that it is in the best interest of
the company and our stockholders that the stockholders approve the agreement and
transaction with HMO Blue. After several months of due diligence and
consideration of several proposals with the assistance of our financial
advisors, the Board of Directors determined that the proposal offered by HMO
Blue was the best of the available alternatives.
Given the low membership in PHPNJ plans, PHPNJ cannot long sustain
itself at the rate at which funds are required to pay expenses and claims
liabilities. The Board believes that the proposed transaction with HMO Blue
helps PHPNJ meet its obligations and preserve its cash so that there is a
greater possibility of some funds being available for distribution to
stockholders when PHPNJ finally winds-up its operations.
In addition to preserving cash, the terms of the proposed transaction
with HMO Blue permit PHPNJ to have up to 140 physicians from the PHPNJ community
on various HMO Blue specialty panels. PHPNJ physicians will also be appointed
to certain committees of HMO Blue and Blue Cross Blue Shield of New Jersey,
Inc., and a PHPNJ nominee will be appointed to the Board of HMO Blue's parent
company. We feel that this substantial representation will help keep alive
PHPNJ's philosophy of physician directed managed care.
The other proposals considered by the Board raised significant
uncertainties concerning value, continued physician involvement and other
issues. We believe none presented the possibilities which an alliance
between PHPNJ physicians and the major health care insurer in the state holds
in this period of great change and even greater evolution of managed care in
New Jersey. Accordingly, the Board of Directors recommends that you vote to
authorize this transaction. Please sign and return the enclosed proxy using
the enclosed envelope, or attend the meeting and vote in person.
Sincerely,
/s/ Joseph D. Billotti
________________________
Joseph D. Billotti, M.D.
Chairman
