Group Health Association, acting to cut its costs in a more competitive health care market, has decided to use Washington Hospital Center as its primary provider of hospital service in the District.

GHA, the area's largest health maintenance organization, had used George Washington University Hospital as its primary provider in the District, but switched last week because Washington Hospital Center offered the same quality of care at a lower price, a GHA spokesman said.

GHA said it expects to save its members "millions of dollars." Washington Healthcare could not predict the effect of the agreement on its revenue. GHA expects to use and pay for about 10,000 patient-bed-days per year at the 922-bed facility, which is a member of the not-for-profit Washington Healthcare Corp.

In addition, the hospital expects to provide still more bed-days for GHA members whose expenses are partially covered by another payer, such as Medicare. GHA members also will use Capitol Hill Hospital and the Center for Ambulatory Surgery, both members along with the Washington Hospital Center of the Washington Healthcare group.

"We think we will learn how [GHA is] successful in controlling costs," said Cheree Cleghorn, spokeswoman for Washington Healthcare, "while [GHA] expects the same quality of care we provide for our other patients."

The agreement also will help the hospital stabilize its occupancy rates, Cleghorn said. Hospital occupancy rates in the Washington area are dropping, and many local health providers are working to increase efficiency to compete for a shrinking market.

Washington Hospital Center reported an average occupancy rate of 77 percent for the first 10 months of 1984, compared with a Washington-area average of 75 percent.

"We recognize the increasing importance of the health maintenance organization movement in this country," Cleghorn said. "We expect it will grow, and want to work with a solid organization."

The agreement affects about 64,000 GHA members in the District, as well as all GHA members who require hospitalization for special services. GHA also uses Fairfax Hospital, Suburban Hospital, Shady Grove Hospital and Prince George's County Hospital.