A key function of the PrimeHealth network will be to negotiate with insurers on behalf of the not-for-profit hospitals and about 3,000 affiliated doctors as a single entity. Hospital officials said they believe the strategy will help them secure better payment rates with HMOs and other managed-care insurers and ensure its hospitals and doctors a steady flow of HMO patients.

Observers said the PrimeHealth group could prove attractive to employers and insurers because of the prestige of its lead hospitals and its geographic reach from south Orange County to the San Fernando Valley.

Robin Weiner, a health care consultant at Foster Higgins in Los Angeles, said the PrimeHealth group will appeal to HMOs because it includes some of the most prestigious tertiary care hospitals in the region. Tertiary care hospitals are those that generally deal with the sickest patients requiring highly sophisticated care.