Nine Hospitals Form Health Care Network : Medicine: Cedars-Sinai and Huntington Memorial are among those banding together hoping for more clout with insurers.

Nine Southern California hospitals--including such high-profile institutions as Cedars-Sinai Medical Center in Los Angeles and Pasadena’s Huntington Memorial Hospital--said Monday that they have formed a new health care network they hope will give them more clout with insurers.

A key function of the PrimeHealth network will be to negotiate with insurers on behalf of the not-for-profit hospitals and about 3,000 affiliated doctors as a single entity. Hospital officials said they believe the strategy will help them secure better payment rates with HMOs and other managed-care insurers and ensure its hospitals and doctors a steady flow of HMO patients.

The PrimeHealth network is the most significant cooperative attempt by the region’s major surgical hospitals to respond to the growing influence of managed care in Southern California.

The network’s lead hospitals--Cedars, Huntington and Long Beach Memorial Medical Center--have been hit hard by managed care’s emphasis on reducing hospital admissions and costs. But industry observers said these hospitals have guarded their independence while smaller competitors reacted more quickly to industry changes.

Besides negotiating contracts, network members say, they will cooperate to enhance patient care, streamline costs and improve their competitiveness during a period of health reform and the fast-growing influence of HMOs.

Observers said the PrimeHealth group could prove attractive to employers and insurers because of the prestige of its lead hospitals and its geographic reach from south Orange County to the San Fernando Valley.

However, one HMO official said the network would have limited appeal.

Jeff Folick, president of California operations for PacifiCare Health Systems, a Cypress-based HMO, said PacifiCare has refused to negotiate with similar health care networks unless the hospitals and doctors actually merge and become a single legal entity.

“I don’t think hardly any HMOs will work with them on that basis,” he said.

But Richard B. Jacobs, president of Voluntary Hospitals of America West and a key PrimeHealth organizer, said the group wants to work cooperatively with health plans to lower costs and improve the quality of patient care.

“Our interest is not to be a bully; that’s not going to work,” Jacobs said. “What we’re attempting to say here is that while these insurers are important to the Southern California health care industry, we’re important too.”

He said the concept has received a “very positive” response from insurers.

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If the network is successful at snagging HMO contracts away from other Southland hospitals, it could help accelerate consolidation in the industry, health care officials said.

The region’s longstanding glut of hospital beds has been growing worse, and most experts predict a wave of hospital closings during the next decade.

Hospital officials said the network will offer employers, insurers and patients a broad choice of medical groups and doctors throughout Los Angeles and Orange counties. The 11 medical groups participating in PrimeHealth are affiliated with the nine hospitals.

“In effect, instead of just being covered by a single hospital or medical group, a PrimeHealth patient will be covered by every member of the network,” Jacobs said.

He said the PrimeHealth members are working together to standardize care for patients and measure the quality of services.

Robin Weiner, a health care consultant at Foster Higgins in Los Angeles, said the PrimeHealth group will appeal to HMOs because it includes some of the most prestigious tertiary care hospitals in the region. Tertiary care hospitals are those that generally deal with the sickest patients requiring highly sophisticated care.

“Here you have an almost perfect network set up for the California employer,” Weiner said. “But in the past, these hospitals haven’t been the lowest-cost facilities, though they are certainly quality ones.

“The real key in their negotiations with managed-care plans will be how cost-efficiently they can deliver services,” Weiner said.

Other hospitals in the PrimeHealth network are Anaheim Memorial Hospital, Saddleback Memorial Medical Center, Pomona Valley Hospital Medical Center, Presbyterian Intercommunity Hospital, Methodist Hospital of Southern California and Valley Presbyterian Hospital.