Massachusetts State Attorney General Thomas F. Reilly is considering a new Harvard proposal to rescue the financially-troubled Harvard Pilgrim Health Care.

In the plan, which University officials said was at the conceptual stage, employers who provide health care through Harvard Pilgrim would invest in the HMO to keep it afloat.

Reilly on Friday said he favored this this new concept, which was put forward by University Vice President for Community Affairs Paul S. Grogan and university management. The Associated Press reported Reilly rejected an alternate plan, in which hospitals would bail out the HMO. Reilly said the plan for hospital-funded aid, which called for taxpayer-backed loan guarantees, did not provide a solution for potential future problems.

The idea of employers who use Harvard Pilgrim to bail out the HMO was hatched after informal consulation with the companies involved, Harvard spokesperson Joe Wrinn said.

"There isn't a plan per se," said Wrinn. "It's a concept to try to expand the circle that had been currently operative in order to include other large industries that would be affected far more than Harvard would."

"Nobody wants to throw money at something that's broken without fixing it," Wrinn said.

Under the concept proposed by Harvard, private investors will provide $175 million, and real estate sales will account for the rest of the money.

Harvard Pilgrim, which lost $197 million in 1999, needs $300 million before it can be considered financially secure enough to resume operations.