New London — The proposed absorption of Lawrence + Memorial Hospital into the Yale-New Haven Health System has to be approved by next month to avoid new regulatory filings that could cost $250,000, executives for the health care organizations said Tuesday.

Marna Borgstrom, president and chief executive of Yale-New Haven, and Bruce Cummings, who has the same title with L+M, said during a meeting with The Day's editorial board that Rhode Island appears to be on track for timely approvals related to L+M-owned Westerly Hospital.

But Connecticut, thanks to a moratorium on hospital mergers declared in February by Gov. Dannel P. Malloy, does not have any momentum to get approvals done quickly, they said.

If Connecticut's regulators do not act by Sept. 8, the executives said, they would have to re-file with the Federal Trade Commission to restart the process.

"That would cost a quarter of a million or more to go through," Borgstrom said. "No patient is going to get better if we spend a quarter of a million in a review process."

Borgstrom and Cummings said they were heading for a hearing on the affiliation later in the day at the office of Rhode Island's attorney general, but so far they have received positive signals that the plan would be approved.

Borgstrom said there are no contingency plans, however, for an affiliation that would involve Westerly Hospital but not L+M.

Cummings laid out the rationale for the combination by pointing to Medicaid payments that don't come close to compensating hospitals for the cost of patient care.

At the same time, the use of Medicaid is on the rise, from 8 percent of patients a little over a decade ago to 18 percent today at L+M.

"We've doubled the number of folks on Medicaid at the same time it's half the repayment levels," he said.

Adding to L+M's financial troubles, he said, is the fact that 70 percent of patients at the hospital are on Medicaid, Medicare or Tricare, the government health care program for military personnel.

L+M used to be able to shift some of the financial burden to commercial insurance carriers, he added, but the hospital is now resisting higher costs on behalf of its customers.

In the past few years, L+M has eliminated about 150 positions and cut $35 million in spending, Cummings said, but budget problems persist.

He said the decision to reach out to Yale-New Haven in an affiliation announced last year was in response to financial difficulties that he feared would leave L+M unable to serve the community the way it had been able to for more than a century.

Borgstrom said a tie-up with Yale-New Haven would lower costs — though she couldn't immediately say how much — by integrating back-office functions such as financial planning, human resources, legal work and information technology.

The combined organization also would be able to borrow money at a cheaper rate, she said.

But the real benefit, Cummings and Borgstrom said, would be in improved patient care, such as access to more specialists and up to 20 new physicians, including those focusing on primary care.

"We'll have a strong local board made up of local people," Cummings said. "On a day-to-day basis ... it really won't result in any changes for staff or patients."

Cummings said the combination would involve only one merger: the L+M Medical Group would become the Northeast Medical Group.

The other entities, L+M and Westerly hospitals, the Visiting Nurse Association of Southeastern Connecticut and a company set up for self-insurance purposes, would maintain their independence, he said, though each would have a new board member from Yale-New Haven.

Borgstrom said L+M also would have a representative on the health system's board.

L+M's endowment and fundraising still would be used for local services, Cummings said.

"It's really very bilateral and collaborative," Borgstrom said.

Yale-New Haven would have the right to approve or disapprove any decision by L+M to sell or acquire an asset as well as any new indebtedness, she added.

Previous mergers with Bridgeport, Greenwich and St. Raphael hospitals have gone very well, Borgstrom maintained.

Cummings said L+M, which has been working cooperatively with Yale-New Haven for about a decade now, currently enjoys some benefits of the larger organization, but not all.

Local patients cannot be part of clinical trials, he said, and Yale-New Haven currently does not operate second-opinion clinics with visiting subspecialists as it would if the organizations formally merged.

Despite the moratorium, which the executives said they consider unconstitutional, the state has approved other mergers, most notably a Trinity Health tie-up that involved dozens of hospitals nationwide.

The executives still are hoping the state Office of Healthcare Access approves the merger between L+M and Yale-New Haven, but the road to approval is not as clear-cut as in Rhode Island, Cummings said.

"We're very concerned about what might happen if this does not go through," Cummings said.

For one, Cummings said, there likely would be a smaller workforce as L+M is forced to continue cutting its budget. L+M also would not be able to offer services as robust as it does today, he said.

In the end, Cummings said, L+M likely would have to look for another partner to be able to soldier on.

"The alternative would require contortions," he said. "It just boggles the mind."

l.howard@theday.com