Groton — For the third year in a row, the parent corporation of Lawrence + Memorial Hospital ended the fiscal year with expenses exceeding revenues, though by significantly less than the previous fiscal year.

In fiscal 2015, L+M Healthcare’s revenues totaled $460.2 million, while expenses were $470.9 million, resulting in a 2.3 percent negative operating margin. The figures, presented at the annual meeting Thursday at the Mystic Marriott, showed improvement compared to fiscal 2014, when L+M ended the year with a 4.1 percent negative margin, partially the result of expenses from a prolonged labor dispute.

L+M Healthcare includes L+M and Westerly hospitals, the Visiting Nurse Association of Southeastern Connecticut, L+M Medical Group — the physician practice organization — and L+M Indemnity — the hospital’s insurance arm.

L+M President and Chief Executive Office Bruce Cummings noted that, taken alone, both hospitals ended the year in the black, but the larger system remained in the red because of a state tax on hospitals, insufficient medical group income and other factors. L+M Hospital generated about $335 million of the system’s total revenues, while Westerly Hospital generated about $72.8 million.

Cummings said L+M’s continued financial weakness strengthens the case for an affiliation with a larger system. This summer L+M and the Yale New Haven Health System filed an application with state regulators seeking the affiliation, a process that is expected to move forward in 2016.

“It doesn’t affect Yale New Haven’s interest in us,” Cummings said. “But it does illustrate the rationale for becoming part of a larger organization. The urgency is greater.”

Cummings said L+M needs to be part of a larger organization to achieve the stability needed to continue making improvements in the access and quality of health care in southeastern Connecticut.

The continuing negative margin, “has influenced our decisions on our capital investments,” said Seth Van Essendelft, L+M vice president and chief financial officer.

Essendelft said about 0.5 percent of the negative margin is attributable to end-of-the-fiscal year rescissions in state Medicaid reimbursements to hospitals. The total financial impact of action by the General Assembly Tuesday to restore some of the cuts is not yet clear, he said. In addition to the Medicaid reimbursement cut, the hospital also paid $8.7 million in a state tax on hospitals in fiscal 2015, he added.

To cope with increasing financial pressures, L+M last year instituted an “extensive and aggressive” cost-cutting initiative that resulted in a $25 million reduction in operating expenses, Cummings said. The reduction follows about $10 million in operating expense cuts the previous year.

Cummings said the savings were achieved through economizing on supplies, reviewing medications used to find cheaper equivalent alternatives, standardizing therapies and treatments provided by different doctors, keeping better controls on overtime and staffing levels and trimming costs of employee health insurance, among other areas.

For fiscal 2016, L+M has set a goal of trimming operating expenses by another $14 million, he added.

Also in fiscal 2015:

• L + M began a “relationship-based care” initiative “to help staff reconnect with why they went into health care in the first place," Cummings said.

• The L+M Medical Group hired 11 new primary care providers in the past year. Christopher Lehrach, president of the medical group, said the recruitment initiative helps advance the goal of inverting the dynamic of healthcare away from the hospital as the center of health care to putting primary care at the center. The hiring of care coordinators is also part of that initiative, he said.

• Patient admissions at the VNA were up 17 percent in fiscal 2015, while patient visits to both L+M and Westerly Hospital declined. L+M saw 289,231 patients in fiscal 2015, compared to 305,868 in 2014. Westerly saw 93,753 patients in fiscal 2015, compared to 94,960 the previous year.

• About $26 million in donations have been raised thus far toward the L+M Cancer Center in Waterford, which opened in 2013. The capital campaign’s goal is $30 million.

j.benson@theday.com

Twitter: @BensonJudy