HOSPITAL MIGHT HAVE ALLY; NEWHALL MEMORIAL, PROVIDENCE MAY UNITE.

Byline: Jason Takenouchi Daily News Staff Writer

A formal search is still weeks away, but Henry Mayo Newhall Memorial Hospital may already have found a potential merger partner.

A spokeswoman with Seattle-based Providence Health System said this week that the group is in talks with Newhall Memorial about the possibility of merging the two organizations. The announcement comes just weeks after the end of negotiations between the hospital and Catholic Healthcare West, a nonprofit group with the most hospitals in the state.

``Right now, Providence in Los Angeles is talking with a number of partners about coming together, and Henry Mayo Newhall is one of those,'' said Sue Wyninegar, a service area director for the nonprofit Catholic group. ``It's hard to be a stand-alone hospital in this day in health care.''

Providence already runs Holy Cross Medical Center in Mission Hills - just south of Santa Clarita - and Saint Joseph Medical Center in Burbank. The group runs 14 other hospitals in Alaska, Oregon and Washington.

Newhall Memorial spokeswoman Janice Newbold said the hospital is not in any talks, informal or formal, with potential partners. The board has not sent out official requests for proposals, she added.

Newhall Memorial likely will need a partner to help it expand emergency services, retrofit for earthquakes and build a roughly $40 million to $50 million patient building. A hospital-sponsored survey recently estimated that Newhall Memorial's service population could more than double in the next 20 years.

A merger with a larger organization also would help the hospital negotiate better deals with health insurance organizations and allow it to cut costs through bulk purchasing of supplies.

Jim Lott, executive vice president at the Healthcare Association of Southern California, said the hospital should not have trouble finding a merger partner because of its reputation and the rapid growth expected in the Santa Clarita Valley.

``Henry Mayo Newhall is strategically placed to be attractive to almost any type of organization,'' he said.

But other analysts say nonprofit hospital organizations, particularly Catholic ones, might be the best fit for facilities such as Newhall Memorial.

``Often what happens is that these facilities that are financially challenged in the competitive environment sometimes are not an attractive business opportunity for the for-profit,'' said Bud Lee, president of the California Association of Catholic Hospitals.

``Often we're the default in terms of trying to make sure the community still has access to health care in that area,'' he said.

Lee said there are about 50 Catholic hospitals and 12 to 15 hospitals affiliated with Catholic health care groups in the state.

But a merger with a Catholic health care group could bring limitations as well as financial clout.

Critics point out that an affiliation with Providence or similar organization will bring limits to reproductive services offered by Newhall Memorial.

If the hospital had merged with Catholic Healthcare West, it likely would have limited abortions - except in situations where the mother's life was at risk - and in vitro fertilizations. The hospital performs six or seven abortions each year.

Considering the advanced stages that negotiations with Catholic Healthcare West reached, hospital spokeswoman Newbold said the hospital's board obviously was comfortable with restrictions on reproductive services if a merger had taken place.

But Susan Fogel, legal director for the California Women's Law Center, said the issue deserves more analysis. While most women get abortions outside hospitals, she said, limitations at hospitals could have wide-ranging effects.

``It's critical for women who are medically fragile to be able to get an abortion in a hospital,'' she said. ``It's also essential for physicians who provide abortions as outpatient services to have transfer agreements with hospitals in case of an emergency.''

Similar concerns are behind parts of Assembly Bill 525, co-sponsored by Assemblywoman Sheila Kuehl, D-Encino, that would require the state Attorney General's Office to study how hospital mergers would affect access to reproductive services.

Other provisions of the bill would give the attorney general new oversight powers in mergers between nonprofits.

``I'm reluctant to leave the provision of services to contract negotiations between two parties in a merger,'' Kuehl said. ``That's a heck of a way to protect constitutional rights.''

The bill will come to the floor next week, Kuehl said.