Sale of Two O.C. Hospitals May Put Jobs in Jeopardy : Takeover: Layoffs are likely at La Palma Intercommunity Hospital and Martin Luther Hospital Anaheim.

Memorial Health Services of Long Beach said Wednesday that it acquired two Orange County hospitals, a deal that could cost more than 500 workers their jobs.

Nonprofit Memorial Health Services purchased the 139-bed La Palma Intercommunity Hospital and the 205-bed Martin Luther Hospital Anaheim from Catholic Healthcare West of San Francisco. Terms weren’t disclosed. Catholic had bought the two hospitals last December from Burbank-based Unihealth.

Ernst & Young consultants hired by Memorial Health will evaluate the operations at La Palma and make recommendations about future use, including shutting the hospital or turning it into a trauma rehabilitation or psychiatric facility. “We’re going to look at a variety of options,” said Memorial Health Chief Executive Thomas Collins. The La Palma hospital employs 560 people.

Martin Luther is little more than half a mile mile from Anaheim Memorial Medical Center, which Memorial Health owns, and will be merged with its neighbor. The two hospitals will consolidate functions such as patient billing, purchasing and information services over the next nine months, Collins said. “We want to turn a former competing hospital into a partner,” he said.

Layoffs are expected, but Collins said it was too early to say how many. Martin Luther employs 598 people.

Martin Luther will be known as Anaheim Memorial Medical Center West Campus. It will become an outpatient facility when consolidation is completed, Collins said.

Memorial Health has been in Orange County for nearly half a century, and the Long Beach area for more than 90 years. The company now owns and operates seven hospitals, including Saddleback Memorial Medical Center in Laguna Hills and Orange Coast Memorial Center in Fountain Valley, among others.