Nine Southern California not-for-profit hospitals and their affiliated physician groups, which include about 3,000 physicians, have created the PrimeHealth network to negotiate with HMOs as a single entity.
Though the deal is not a merger, the physician groups and the hospitals will have an equal role in the governance of the network. The arrangement will allow HMOs to offer medical services in a broad geographic area from Orange County to the San Fernando Valley through a single contract with an employer.
The network's hospitals and systems include Cedars-Sinai Medical Center, Los Angeles; Southern California Healthcare Systems, Pasadena (Huntington Memorial Hospital and Methodist Hospital of Southern California); Memorial Health Services, Long Beach (Long Beach Memorial Medical Center and Saddleback Memorial Medical Center); Anaheim (Calif.) Memorial Hospital; Pomona Valley Hospital Medical Center, Pomona; Presbyterian Intercommunity Hospital, Whittier; and Valley Presbyterian Hospital, Van Nuys.
Though "it's an attractive group of hospitals from a quality standpoint, the question is, can they deliver cost-effective care?" asked Robin Weiner, managing consultant at A. Foster Higgins in Los Angeles, an employee benefits consulting firm.
Most hospitals tend to rely on specialist medical groups that funnel patients into the hospital. But managed care relies on primary-care physicians who "under normal circumstances do not want to put people in the hospital," Ms. Weiner said.
The medical groups affiliated with one of the lead hospitals in the network, Long Beach Memorial, are "specialty-based," conceded a hospital spokesman. "But we're working to change that."