Mercy, Scripps Talk of Joint Health Care

Mercy Hospital and the Scripps medical institutions are exploring whether to put together a joint managed-care provider network that could contract with businesses and insurers to care for San Diego County residents.

“We have a letter of agreement to study the feasibility of working together for exploring an expanded managed-care provider network,” said Michael Bardin, spokesman for Scripps Memorial Hospitals. “It doesn’t involve operations between the two entities at all.”

By mid-July, hospital officials expect to conclude their consideration of what joint efforts, if any, are feasible, Bardin said. A managed-care provider offers health care, mostly through companies, at low rates and by a specific set of physicians at a specific health-care center.

The arrangement between Scripps and Mercy--at 523 beds, the largest hospital in the county--would be a new wrinkle in the movement toward joint efforts by health-care providers in San Diego County.

It would be neither an actual merger, like that of Scripps Clinic and Scripps Memorial Hospitals last year, nor an affiliation that pulls one entity under the wing of another, as proposed in the controversial Sharp-Grossmont affiliation.

Instead, both Mercy and the Scripps group would remain independent, cooperating only in offering managed care to employers, insurance companies and public providers such as Medi-Cal.

Together, a Scripps-Mercy group would control about 20% of the 6,500 licensed hospital beds in the county, as well as the medical infrastructure associated with them.

That is about the same as the share that would be held by Sharp HealthCare if its affiliation with Grossmont Hospital District takes place. However, a controversial vote to approve the affiliation has sparked a recall effort against Grossmont board members as well as threats of a lawsuit. A final vote is pending.

Market analysts say the trend is clear: Hospitals will join together to form mutually beneficial alliances over the next several years. This is necessary because cutbacks in reimbursements by insurers, Medicare and the state’s Medi-Cal program have made operating hospitals more and more difficult.

Analysts predict three or four conglomerates will emerge. If the Mercy and Grossmont efforts bear fruit, those would be:

* The Scripps-Mercy cooperation, with hospitals stretching from Encinitas and San Marcos to Chula Vista.

* The Sharp-Grossmont network, extending from Temecula to Chula Vista. Sharp also has been discussing adding the two hospitals of the Palomar Pomerado Hospital District to its group.

* UC San Diego Medical Center, with its existing Hillcrest hospital and Thornton Hospital in La Jolla now under construction. UCSD and Children’s Hospital also are negotiating to centralize the university’s pediatric programs at Children’s.

* Kaiser Permanente, which announced Tuesday that it was adding a second hospital in San Diego County.

Kaiser has long been the premier managed-care provider in California, offering its combination of doctors, technical services and hospital care to employers looking to provide health care for employees.