New London — Lawrence + Memorial Healthcare and the Yale-New Haven Health System are discussing an affiliation that would join L+M to the vast network of the larger institution, which stretches from Greenwich to the northwest corner and as far east as Old Saybrook.

In a letter to staff Friday morning, L+M President and Chief Executive Office Bruce Cummings acknowledged that the possible affiliation has been rumored for months.

The hospital’s board of directors, responding to rapid changes and increasing financial pressures on the hospital, urged the talks with Yale-New Haven, he said, but stressed that no decisions have been made.

“If it makes sense for both organizations to develop a formal affiliation that joins us together,” he wrote, “we will seek board and regulatory approvals this summer.”

L+M spokesman Michael O’Farrell confirmed that the letter was distributed at 10:45 a.m. to physicians and hospital staff.

Doctors are mostly supportive of the possible affiliation, said Dr. David Reisfeld, president of the medical staff.

“I’m very excited about it,” he said. “It will bring some resources and skill sets. There are a lot of synergies you can get from being part of a larger system.”

For patients, he said, the news is also positive, because it means their community hospital will be stronger but not lose its own identity.

Yale-New Haven, he said, may provide some financial assistance to upgrade L+M facilities and replace the electronic medical records system, as well as enable L+M to use the structure it already has created to undertake “population health management,” an emphasis of the federal Affordable Care Act, Reisfeld said.

“Yale will bring their innovative use of administrative personnel and expertise in decision making, and we bring a lot to the table, too,” he said. “L+M still has strong fundamentals.”

Vin Petrini, spokesman for Yale-New Haven, said the main benefit of an affiliation for both institutions would be achieving economies of scale. Staff reductions would be kept to a minimum, he said.

“We try to minimize the impact on people,” he said.

State budget impact

In his letter, Cummings referenced the recently passed state budget, which increases taxes on hospital revenue and reduces Medicaid reimbursements.

Changing Medicare policies and a push toward "accountable care" — in which health care providers are reimbursed more on outcomes than on procedures and office visits — are additional factors, he said.

The state budget impact on hospitals was cited in Wednesday's announcement by Hartford HealthCare, the parent of The William W. Backus Hospital in Norwich, of program cuts and reductions in staffing through layoffs, job reductions, retirements and attrition.

Yale-New Haven cited the same reason for closing its Branford and East Haven clinics.

In addition to the state and federal reductions, L+M ended the last two fiscal years with negative operating margins of expenses over revenues.

L+M Healthcare is the parent organization of L+M Hospital, The Westerly Hospital, the Visiting Nurse Association of Southeastern Connecticut and the L+M Medical Group.

O'Farrell said he could not provide information about how an affiliation would reduce expenses at L+M, since no agreement has been reached yet.

In response to the letter, the presidents of the three L+M unions released a joint statement to their members, saying "Because of the changing landscape in the health care industry we have been planning accordingly for this possibility, so that we will have a seat at the table in this process."

Harry Rodriguez, president of the health care workers' local, Stephanie Johson, president of the licensed practical nurses and technologists' local, and Lisa D'Abrosca, president of the registered nurses' local, said they have scheduled a meeting with Cummings and other L+M administrators to learn details of the talks.

They said they will continue "holding current and future leadership of our community hospital accountable to putting patients ahead of profits."

Union contracts, they added, include "successorship clauses" that will maintain job security protections "even if any merger or affiliation takes place after they expire."

Dr. Todd Blue, chairman of the L+M radiology department, said the new state budget all but makes affiliation inevitable as the best means to ensure the hospital remains viable. Doing nothing, he said, leaves L+M more vulnerable to the increasing challenges of providing health care.

“Unfortunately,” he said, “the way our state has been going about health care finances, it’s left places like us with very little option.”

There is some anxiety among the medical staff and hospital employees, he said, but overall, attitudes are positive about joining the Yale-New Haven network.

“I’m optimistic it will help shore up L+M,” he said. For patients, he believes an affiliation will improve access to specialty care available at Yale-New Haven.

“Our patients will have easier and more direct access to their expertise,” he said.

Affiliation trend

The possible affiliation with Yale, Cummings said, would be a logical transition for L+M, given its longstanding clinical partnerships with the larger system for clinical services including radiation oncology, neonatology, telestroke, pediatric emergency medicine, invasive cardiology and angioplasty and vascular surgery.

Even so, L+M had appeared to be resisting the consolidation of independent nonprofit hospitals around the state into larger networks like Backus and others have done.

Cummings had led an effort of the remaining independent hospitals into a cooperative network, the Value Care Alliance, to better enable them to retain their autonomy.

L+M recently celebrated its 100th anniversary, and remains committed to serving its home community, he said.

O’Farrell said the talks began in the past couple of months at L+M’s initiative. Yale-New Haven had made previous overtures to L+M about an affiliation, however, he said.

Local residents should not be concerned that an affiliation with Yale-New Haven would mean L+M loses its community identity, he said.

“We’re not leaving New London,” he said. “The name will stay the same. We can make a good case that the community hospital will be strengthened through this.”

L+M Healthcare would remain intact, Cummings said, with both L+M Hospital and The Westerly Hospital maintaining their separate licenses, separate accreditations, separate wage and benefits plans and own boards of directors.

The medical staffs would remain in place with their own laws, rules and elected officers, and physician groups with exclusive agreements with L+M or Westerly Hospital would not change, he said.

Cummings said the affiliation is being explored as a means of better positioning L+M to maintain its strength and viability long-term.

If it joins the Yale-New Haven, L+M would become the fourth acute care hospital in the system, along with Greenwich Hospital, Bridgeport Hospital and Yale-New Haven Hospital, which includes the Saint Raphael Campus.

The Yale-New Haven network also includes Smilow Cancer Center facilities in Fairfield, Old Saybrook, Waterbury, Sharon and Torrington, children’s hospital and psychiatric hospital in New Haven, and outpatient clinics offering a variety of services in more than a dozen other communities in Litchfield, Fairfield, New Haven and Middlesex counties.

Stephen Frayne, senior vice president of health policy at the Connecticut Hospital Association, said the trend for smaller community hospitals to affiliate with larger networks goes back a decade and is expected to continue.

Medicare, Medicaid and insurers that provide the main sources of revenue for hospitals are increasingly favoring larger institutions with integration of services.

Hospitals are able to offer a wider variety of clinical services and save on pharmaceuticals, utility costs and other expenses as part of larger networks, he said.

Statewide, there are four main hospital networks that incorporate smaller community hospitals — the Western Connecticut Health Network, the Eastern Connecticut Health Network, Hartford HealthCare and the Yale-New Haven Health System.

The most recent hospital to join one of these was New Milford Hospital, which joined the Western Connecticut network in October.

j.benson@theday.com

Twitter: @BensonJudy