BLUE CROSS AGREES TO DEAL PROVIDER TO STAY AT NEWHALL MEMORIAL IN SANTA CLARITA.

Byline: Patricia Farrell Aidem Staff Writer

VALENCIA - Blue Cross of California signed a new three-year contract Thursday with Santa Clarita's only hospital, following weeks of negotiations.

Today was the deadline for the insurance giant to negotiate a new contract with Henry Mayo Newhall Memorial Hospital, which its officials say has lost money on Blue Cross patients since an exclusive pact was approved in 1996.

In the end, Blue Cross agreed to Newhall Memorial's terms, hospital spokeswoman Janice Newbold said. Hospital officials would not provide details of the new contract, which covers thousands of area residents.

``Blue Cross accepted our proposed rate increase, and our new contract is effective immediately,'' Jim Yoshioka, the hospital's new president and chief executive officer, said in a prepared statement.

``We've been working hard to find a way to continue serving Blue Cross patients in our community without suffering the financial losses we have accumulated under our old contract.''

Service to those patients who carry Blue Cross - an estimated 20 percent of the hospital's patient load - will continue uninterrupted, Newbold said.

The previous contract is blamed in part for the hospital's current financial crisis. Ousted hospital President Duffy Watson settled for an exclusive contract to thwart competition, but agreed to a low rate of reimbursement.

The result was heavy financial losses for the hospital. At the request of the hospital's board of directors, Watson resigned earlier this year.

Blue Cross representatives did not return telephone calls Thursday, but in an interview last week, spokesman Michael Chee said the company was willing to negotiate, but would not take responsibility for the hospital's financial condition.