Sharp Now Seeks Grossmont Merger : Health Care: Spurned by Scripps Clinic, organization has begun talks in hopes of joining up with hospital district.

Grossmont Hospital District and Sharp HealthCare began formal talks on joining forces Friday, marking another chapter in hospital merger-mania in San Diego County.

The announcement came exactly 10 weeks after Scripps Clinic stunned Sharp by deciding to unify with Scripps Memorial Hospitals after long negotiations with Sharp.

An announcement from Grossmont Friday afternoon alluded to that turnabout. “Neither institution will be discussing affiliation possibilities with other organizations as these discussions proceed,” it said.

However, unlike in previous merger talks, Grossmont officials were more forthcoming about details.

“We’re a district hospital, and we feel that as a district hospital we have a responsibility to the public to let them know what we’re doing,” said Grossmont’s communications director, Cheryl Kendrick.

She said the hospital issued the announcement as soon as the discussions with Sharp became serious, she said. She stressed that no decisions have been made.

Kendrick speculated freely, for instance, about how Grossmont--a district hospital that receives tax revenues from its East County district--might be able to unify with a non-district organization such as Sharp.

To accomplish a merger, a separate corporation could be formed to lease Grossmont Hospital from the hospital district, she said. It would be the corporation, then, not the district, that would be affiliating with Sharp HealthCare, she said.

Sharp is a large nonprofit health care conglomerate with hospitals and other facilities stretching from Temecula to Chula Vista. Its flagship facility is Sharp Memorial Hospital near Kearny Mesa.

Although Grossmont in La Mesa has only one hospital, it is a dominant one in eastern San Diego County, where Sharp hasn’t had a toehold. Consequently, a merger would not result in overlaps between the two systems.

Affiliation between the two organizations also makes sense in the competitive marketplace of the past decade, during which hospitals garnered much of their patient load through managed-care contracts with insurers or large employers. Having that broad geographic coverage makes a hospital system more attractive to these big customers.

Pat Keast, vice president for member services of the California Assn. of Hospitals, said the mergers of large institutions with one another is a San Diego twist on a statewide phenomenon. Elsewhere, mergers have mostly been between two small hospitals that join forces to avoid duplication of services. One small hospital might retain acute care while the other becomes a rehabilitation hospital, she said.

In the case of Sharp and Grossmont, however, that kind of specialization would be unlikely.

Indeed, Grossmont recently completed a new women’s center and Sharp Memorial is building one; both would remain.

“They’ll be one combined organization with two great women’s centers in two different locations,” said Jan Frates, a health care consultant in San Diego. “I think it’s going to be a real powerful combination.”

Frates and others predicted that the merger trend will continue in San Diego because of the highly competitive health care marketplace.

“There’s strength in numbers, and it’s also a typical pattern in business,” Frates said. “It’s following banking and airlines: you have deregulation, you have intense competition and then, as part of the industry shakeout, consolidations occur.”

Sharp was surprised to learn July 27 that a year of merger talks with Scripps Clinic had been undercut by whirlwind, secret discussions between the clinic and Scripps Memorial Hospitals. They will merge on Jan. 1, 1991.

Grossmont’s Kendrick said the hospital had been talking informally recently with several other organizations about merging, but those discussions are suspended now.