PUEBLO STORY.

• Author: GENTRY, BOB

The odd coincidence. The unusual turn of events. When it comes to Pueblo's economy, melodrama seems to be the norm. Faced with a catastrophic event for the umpteenth time in its economic history, the city once again bounced back last year. And as the new millennium gets underway, Pueblo's resilient economy once again is a picture of stability.

But less than two years ago, the city's economy got a gut punch no one foresaw. This is the inside story of Pueblo's latest big comeback.

You could say it all goes back to 1997. That's when Pueblo neurologist and entrepreneur Dr. Malik Hasan rolled QualMed, the HMO he had founded in 1985, into California-based Foundation Health Systems Inc., a $1.34 billion merger. Hasan retired in March 1999.

In late '97, Foundation announced that it would move most of its operations from California to a three-building complex in downtown Pueblo. The 150,000-square-foot center would bring the city's core hundreds of high-paying technical and managerial positions.

A deal was struck, and the plan was well underway. Two downtown buildings were remodeled, and state-of-the-art fiber optic lines, cables and communications equipment were added. The payroll had grown to 350, with 1,000 jobs planned at the center.

Then, to nearly everyone's surprise, officials at Foundation Health Systems announced that its QualMed division would pull out of the Colorado market by April 1, 2000, the Pueblo claims processing center would be closed and its work reassigned to another processing center in another state.

Colorado's news media grabbed the story and ran. The QualMed jobs would go, followed by other support industries -- software, hardware and support vendors and suppliers, systems administrators. Observers agreed Pueblo faced economic disaster, not for the first time.

At about that time, a salesman named Steve Olson applied for a job in Denver with Wayzata, Minn.-based The TPA Inc., an acronym for "Third-Party Administrator." The TPA bills itself as the largest independent health-care administrator in the United States.

And a train of events began, destined to arrive at that rarest of destinations, a happy ending.

Olson was interviewing with William Sagan, chief executive officer of The TPA, and the question of health care in Colorado came up. Olson mentioned that he had just read about the decision to close QualMed's Pueblo service center.

Sagan headed a fast-growing company (4.7 million claims processed in 1998; $74.4 million in...