Hospital mergers multiply as health care providers attempt to cope with rising costs.

In recent months, three pairs of Southland hospitals have signed agreements to merge or merge services, in what is a growing trend, according to the Hospital Council of Southern California.

Cedars-Sinai Medical Center of Los Angeles is in the process of forming a "strategic alliance" with Valley Presbyterian Hospital of Van Nuys. Little Company of Mary Hospital of Torrance announced it plans to affiliate with San Pedro Peninsula Hospital. And Inter-Community Medical Center in Covina plans to merge with Queen of the Valley Hospital in West Covina.

David Langness, spokesman for the Hospital Council of Southern California, said the three recent pairings are only the beginning. "Others are upcoming and to be announced soon," he said. The hospitals in merger talks involve more "large medical centers," Langness said.

There are two major reasons hospitals are trying to pool their resources these days, Langness said.

By merging, independent hospitals gain more clout in negotiating for managed-care contracts from insurance companies, Langness said. "Hospitals were finding themselves pitted against each other for rates," he said.

In addition, hospitals that join forces can contain capital outlays, Langness said. "Hospitals are finding they are better off cooperating than competing in some areas . . . (and pool their resources on) high-tech equipment, for instance, or building of new wings."

Inter-Community, a 280-bed hospital, should complete its merger with Queen of the Valley, a 262-bed facility, by about August, said Duane Carlberg, chief operating officer of Inter-Community Health Services Inc., parent company of the hospital. There will be one parent corporation for the facilities, but the hospital names "will probably stay the same," he said.

In January, Los Angeles-based Cedars-Sinai Medical Center announced it was forming a strategic alliance with Van Nuys-based Valley Presbyterian Hospital. A joint coordinating committee, made up of members of the administrations and medical staffs of both hospitals, will oversee the development and implementation of cooperative programs.

One idea the committee is currently considering is borrowing Cedars neonatal specialists to work in Valley Presbyterian's pediatric intensive care unit, said Steve Sibilsky, director of public relations for Valley Presbyterian. The two hospitals are also discussing the possibility of joining forces to bid for managed care contracts, Sibilsky said.

"Although we remain separate institutions serving different communities, Cedars and Valley Pres have much in common," said Sheldon S. King, president of Cedars-Sinai. "In crafting this alliance, we have carefully discussed and examined the challenges we both face, such as rising costs, shrinking reimbursements and increasing competition from non-profit hospital chains."

Little Company of Mary in Torrance signed a memorandum of understanding in February to form an alliance with San Pedro Peninsula Hospital and officials hope to execute it by June, said Terri Starkman, director of community relations for Little Company of Mary.

Under the agreement, the two hospitals would operate under separate licenses and would have separate foundations, but would come together under one new corporation, Little Co. of Mary Health Systems/Cal., Starkman said.

Lisa Farnan, director of managed care programs for Little Company of Mary, said the alliance would give the two hospitals a greater geographical coverage area and more services which would help them win managed health care contracts. In addition, the hospitals could share the managed care contract programs they now have, Farnan said.

The hospital pairings must be reviewed by the Federal Trade Commission and the U.S. Justice Department for possible antitrust violations, hospital officials said.

Mergers and strategic alliances will continue to be formed, for a number of reasons, said Charles Harrison, partner in charge of Southern California Health Care Industry practice for accounting firm Arthur Andersen, which advises several Southland hospitals. "The economics are good," he said.

Mergers and agreements make hospitals more attractive as contract recipients for managed care contracts, Harrison said. "Typically, the insurance companies really have got to sign up with a full-service hospital," he said.

This is especially important since managed-care programs continue to make up a growing share of the payments that hospitals receive, Harrison said. Managed-care programs account for 35 to 40 percent of hospitals' payables, with indemnity insurance comprising 10 percent and government programs the remaining roughly 50 percent, Harrison said.

By contrast, patients in an health maintenance organization plan must go where the HMO has a contract, simplifying the HMO financial world, he noted.