We respond to the rising costs of health care by looking at our business in new and innovative ways. By forming new relationships that draw on the core competencies of each partner, we are improving efficiency, lowering costs and expanding our revenue base and geographic markets. Last year, Blue Cross and Blue Shield of Maryland explored the advantages of partnership with Blue Cross and Blue Shield of the National Capital Area, and, in January 1997, we announced plans to combine operations pending regulatory approval. The combined businesses will create a regional health care provider with annual revenues of more than $3 billion and a customer base of 2.1 million people in Maryland, Delaware, the District of Columbia and Northern Virginia.

        The company also announced the acquisition of a 16 percent interest in Preferred Health Network, Inc., a hospital-owned managed care company offering health care services to more than 50,000 members in the Baltimore, Washington D.C. and Northern Virginia markets. ntum that drives our business to achieve and maintain these high standards