UCSD Medical Center Seeks Members for Alliance : Health: A fourth conglomerate could be created if the university is successful in bringing unaffiliated hospitals under its wing.

UC San Diego Medical Center has begun talks with unaffiliated hospitals in San Diego County, trying to create a loose alliance that would be the fourth and final piece of the medical conglomeration puzzle in the county.

If they succeed, the discussions would put together an organization of independent facilities to compete together against those of Sharp HealthCare, the Scripps Institutions of Medicine and Science, and Kaiser Permanente.

But, just as those three differ from each other, so would UCSD’s differ from them, said Michael Stringer, administrator of UCSD Medical Center.

“We’re not looking at mergers or takeovers or buyouts or whatever,” Stringer said. “We’re looking for relationships that are more complex, because they’re dependent on cooperation and respect and protection of our individual interests.

“We want to maintain essentially independence, and would like to see that other hospitals remain independent.”

The discussions could lead to an announcement of some type of agreement within the next 30 to 90 days, said Dan McLean, chief executive officer of Alvarado Hospital.

Alvarado is among the hospitals discussing a cooperative agreement with UCSD.

“We’ve been spending a lot of time on it, and we’ve come a long way in defining what it is we want to do and how to do it,” McLean said.

The idea would be for independent or smaller health care institutions to cooperate with UCSD to share services when appropriate, refer patients among themselves, and contract with employers to provide health care within the system.

The network would therefore need a wide geographical base as well as a broad mix of facility types, from acute care to nursing homes and rehabilitation.

UCSD, for instance, might want to have the nursing home facilities of a hospital such as Paradise Valley to use for its patients. This would add to the range of services for any contract network, as well as provide a steadier patient base for the smaller hospitals in the county.

Among other hospitals participating in discussions with UCSD are Paradise Valley, Harborview Medical Center, Mission Bay Hospital and Coronado Hospital.

It is not clear whether state law would allow hospital districts, such as Tri-City in Oceanside and Palomar-Pomerado in Escondido, to participate.

In addition, after five years of negotiations, UCSD and Children’s Hospital are near signing an agreement to centralize UCSD’s pediatrics programs at Children’s, said Blair Sadler, chief executive officer at Children’s.

Although there might have to be a separate corporate entity created to oversee contracting issues in such a network, the idea would be to work out individually what is best for each hospital, officials say.

For UCSD, supporting the missions of teaching and research is paramount, but it is also important to have a firm financial base from which to do that, administrators have long said.

That is why the university is building a hospital in La Jolla, to draw patients who would not otherwise go to a UCSD facility.

“In some ways we have a unique role,” Stringer said. “We need to look at programs and projects in ways that add some value to our missions. And I think in order to do that we have to be fairly flexible, . . . to essentially work with any provider where a mutually satisfactory relationship can be developed.”

Indeed, Stringer said he wouldn’t rule out cooperating with hospitals that are already affiliated with other health care systems. For instance, negotiations are continuing with Scripps Memorial Hospital-La Jolla for obstetric service.

Nonetheless, some health care executives have grumbled privately over the past several years that UCSD’s expansions are making it into a competitor rather than a teaching facility. Such complaints can be expected to intensify if cooperation agreements are signed.

Health care analysts have been predicting in recent years that cost pressures on hospitals will force them more and more into large conglomerates that assure a patient base by becoming, in effect, health care insurers.

Sharp, Scripps and UCSD all currently benefit from some variation of that scenario, either through their own medical plan or one such as Health Net. In addition, Kaiser Permanente continues to boom as employers seek less costly ways to offer health care benefits to employees.

Sharp acquired or affiliated over the past two years with hospitals stretching from Temecula to Chula Vista, and is embroiled in a controversy over its attempt to bring Grossmont Medical Center under its wing. In January, the Scripps Clinic and Scripps Memorial facilities united as one, and they are in the final stages of adding Mercy Hospital to their network.

Unanswered in the affiliation frenzy is just when cooperating to assure a patient base becomes an anti-competitive restraint of trade.

“As a matter of policy, it looks as if the feds and the state have said that relationships that will enhance the thrust to reduce costs, avoid duplication and create efficiencies are a good thing,” Stringer said. “Now how one measures how far one can go before crossing over that line into an anti-competitive mode, it’s hard to judge. And I don’t know what that line is.”