HOSPITAL PONDERS LINKUP : MAJOR CHAIN APPROACHES ANTELOPE VALLEY OFFICIALS.

Byline: Karen Maeshiro Daily News Staff Writer

Antelope Valley Hospital is exploring the idea of linking up with the nation's largest hospital chain, but state law is ambiguous as to whether public hospitals can legally join forces with for-profit companies.

Officials at publicly owned Antelope Valley Hospital have had an introductory round of discussions with a representative of Columbia/HCA Healthcare Corp., where possible scenarios on joint ventures were discussed.

``To tell you the truth, current law is not clear on that,'' said Barbara Glaser, a legislative advocate with the Association of California Healthcare Districts. ``Some would say the law is silent, so you can do it. Others would say the law does not expressly authorize that and you can't.''

The association represents hospitals like Antelope Valley Hospital, run by a district board of elected directors and owned by the public, just as facilities of a city or a school district are public owned.

``A lot of district hospitals are looking at joint ventures with both nonprofits and for-profits. It's clearly allowable with a nonprofit company. It's not clear on for-profits,'' Glaser said.

In a period of managed care and stiff competition for health care dollars, all types of hospitals are looking for ways to stay competitive and financially solvent, experts say.

``More hospitals, whether public or private, are looking at affiliation,'' Glaser said. ``The old days of stand-alone hospitals are coming to an end. Hospitals feel they can't make it on their own.''

Antelope Valley Hospital's administrator, Robert Harenski, and two of the board members, Hank Marvin and Dante Simi, met two weeks ago with an official from Columbia, which owns more than 340 hospitals, 130 outpatient centers and 182 home-health agencies in 38 states, England and Switzerland.

The company, which has annual revenues of $17 billion, has been described in the Wall Street Journal as having expanded rapidly over the past three years through an aggressive program of acquiring for-profit chains and, increasingly, nonprofit hospitals.

Antelope Valley Hospital officials said Columbia officials requested the meeting and said their strategy is to set up a national network and to work with the principal health care providers in a general market area.

``They have purchased some hospitals and are also doing joint-venture negotiations in California,'' Simi said. ``We fit the profile of what they go after. They go after the top health care facility in the area. That's why they wanted to talk to us. It's our responsibility to listen.''

Both Antelope Valley Hospital and Columbia officials stressed that speculation about any potential deal is premature.

``We're in and out of markets discussing various possibilities virtually every day,'' Columbia spokesman Jeff Prescott. ``Until we have a letter of intent, it's really premature (to speculate) what we will and will not do.''

Other meetings are planned with other Antelope Valley Hospital board members. Marvin said he suggested community leaders be invited. If such a proposal is pursued, it would need the wholesale backing of the community, staff and physicians.

``Columbia is talking to everybody in the state,'' Harenski said. ``They gave us a basic dog-and-pony show and talked in a broad range of concepts (about joint-venture arrangements).''

Columbia representatives at the meeting mentioned other ways - which Marvin called interesting and worthy of further exploration - in which Antelope Valley Hospital could be included in a vast health care network, according to Marvin.

Under one concept, Columbia could pay a hospital a certain sum to run the hospital, officials said.

In one scenario, the hospital would plow its share into the community for clinics and other types of medical services, while Columbia could keep whatever profit it made beyond that.

The hospital and Columbia also could split any annual profits, officials said.

Faced with the prospect of local physician groups forging alliances with other hospitals or health care providers, Antelope Valley Hospital officials say affiliating with Columbia could help ensure the survival of the 358-bed, 1,300-employee facility that opened in 1955.

``Let's say all the physician groups get affiliated with a larger group. This group has contracts with other hospitals. We could lose patients,'' Simi said. ``Columbia has large contracts with HMOs. They could keep patients coming to Antelope Valley Hospital.''

Marvin said a joint venture with Columbia could ensure the hospital's continued existence. With health care mergers common, there is a danger the hospital will be left behind, Marvin said.

``If we don't, we are a stand-alone hospital. I'm not saying you can't stand alone, but it sounds kind of scary,'' Marvin said.

Marvin said he sees some disadvantages.

``Any time you associate with somebody else and they were doing the administration, to me, that's a loss of control. That's a consideration,'' Marvin said. ``The district board's job would change. We would not be so involved with the everyday running of the hospital.''

Glaser of ACHD noted the example of Sequoia District Hospital in Redwood City, which had been profitable in the past but in the last several years has seen revenues decline.

Sequoia officials put out requests for proposals for a joint venture and were approached by a for-profit company and a nonprofit company, Glaser said.

The hospital board decided to team with the nonprofit entity, and the proposal must be approved by voters in the district because it involves a major transfer of district assets, Glaser said.

Antelope Valley Hospital has tried its hand at forming joint ventures with local doctors to compete for contracts with health maintenance organizations and other insurance plans.

But talks with High Desert Medical Group and Sierra Medical Group - to create a separate company called a physician hospital organization - recently ended with no agreement, officials said.

In the meantime, Antelope Valley Medical Group officials say they are in discussions with other entities. ``We are in negotiations with several parties to do a merger or other forms of business relations,'' said administrator Mathew Abraham.