ROANOKE -- A proposed merger announced last week between two hospitals and a health care association would create a huge 11-hospital network stretching from Farmville, Va., to Big Stone Gap, officials said.

Negotiations are under way for the Southwest Virginia merger, which would create an association with $250 million in annual revenue, $200 million in assets and 5,500 employes.

Under the plan, a holding company would be created including the 400-bed Community Hospital of the Roanoke Valley and the 175-bed Radford Community Hospital, plus the nine-hospital Roanoke Hospital Association. Representatives from the three groups would serve on the holding company board.

The hospital association includes Roanoke Memorial, Bedford County Memorial, Gill Memorial and hospitals in Farmville, Tazewell, Rocky Mount, Pearisburg, Big Stone Gap and Wytheville. The Roanoke hospital not included in the merger is Lewis-Gale Hospital, owned by the Hospital Corp. of America.

Analysts say the merger would be financially beneficial because in addition to combined buying power, member hospitals would be eligible for discounts from health insurers in a time of skyrocketing insurance costs.

The network will offer "millions of dollars" in savings for the member hospitals through combined buying power, said Thomas Robertson, president of the Roanoke Hospital Association who will head the network.

"The boards of all three hospitals agree that a formal relationship will be mutually beneficial, while the system will be structured to allow individual hospitals to remain responsive to local community needs," said Robertson.

Affiliation is not a new venture in Virginia. Hospitals in Lynchburg, Hampton Roads, Norfolk and Northern Virginia already have formed such alliances.

Robertson said the merger could be final in four to six months, once negotiations are complete. Officials have not decided on a name for the new health care system. The merger must be approved by regulatory agencies.

Robertson suggested that the network would help the local economy. He said that when companies consider relocating their businesses or building new plants, they look for a reliable name in health care services.

While some services offered by the member hospitals will be combined, Robertson said employes' job are not being threatened.