Santa Monica Hospital, UCLA Medical Center Discuss Merger : Health care: Move is seen as a blow to rival St. John’s facility, which had been pursuing a partnership for nearly a year.

In a move that could accelerate hospital consolidation in Southern California, Santa Monica Hospital Medical Center said it is in exclusive merger talks with UCLA Medical Center.

The disclosure is a blow to St. John’s Hospital and Health Center in Santa Monica, which had been wooing its Santa Monica rival for nearly a year.

Bruce Lamoureux, St. John’s chief operating officer, said the hospital was “disappointed” by Santa Monica Hospital’s decision to break off talks. “We felt it was a once in a lifetime opportunity to build a strong health care community for the 21st Century,” he said.

UCLA Medical Center, like most U.S. teaching hospitals, has a medical staff dominated by specialists. Thus, UCLA has been trying to cope with health care changes that place more emphasis on the role of primary-care doctors rather than specialists.

Santa Monica Hospital, which is owned by Burbank-based UniHealth America, a large nonprofit health care system, has a reputation as a cost-efficient community hospital with a strong program in primary-care medicine.

Mark Laret, deputy director of UCLA Medical Center in Westwood, said the key goal of the merger would be to combine Santa Monica Hospital’s strength in primary-care medicine, especially pediatrics and obstetrics, with UCLA’s strength as an internationally renowned major surgical hospital.

Hospitals have been under intense economic pressure from health maintenance organizations and other managed-care companies. Responding to demands by employers to cut medical costs, managed care companies have been negotiating deep discounts in hospital fees. Moreover, many Southland hospitals are suffering from a glut of empty beds as an increasing number of medical procedures are performed outside the hospital.

“Most of the area’s hospitals are in the red, and the only way to get into the black is to acquire or network with other institutions to get economies of scale or negotiating clout” with managed care firms, said David Langness, a spokesman for the Hospital Council of Southern California. “The pressure to get bigger is intense.”

Langness said a merger between UCLA and Santa Monica Hospital would have a big impact in the “intensely competitive” Westside hospital market. He said other Westside hospitals would face greater pressure to merge or form affiliations to increase their cost-competitiveness.

“The outcome of these negotiations . . . will influence health care delivery on the Westside for years to come,” Langness said.

Laret said he expects the two hospitals will reach an agreement under which Santa Monica Hospital would become part of the University of California hospital system. Any proposal would have to go to the University of California Board of Regents for approval.

“Our goal is to initially operate the facilities independently,” Laret said.

A Santa Monica Hospital official declined to say why talks with St. John’s were ended. Discussions between the two nonprofit hospitals began in February after the Northridge earthquake, during which both hospitals suffered heavy structural damage.

Inpatient services at St. John’s were shut down for nine months, reopening in October with its number of beds cut almost in half, from 501 to 260. Santa Monica Hospital remained open, but temporarily reduced its operations.

The earthquake damage prompted both hospitals to take a hard look at the overlap in their services and the need for two hospitals in Santa Monica.