New London — The region’s largest health care provider will become part of the even larger Yale-New Haven Health network under conditions regulators have never before imposed on the state’s hospitals.

Under the affiliation agreement between Lawrence + Memorial Healthcare and Yale-New Haven approved by the state Office of Healthcare Access on Thursday, the two hospital networks will be overseen by an independent monitor who will set caps on price increases and verify compliance with the requirements for maintaining services, capital investments and other areas.

The monitor must be hired within 60 days for a two-year contract that can be extended another year, with expenses paid by Yale-New Haven. The monitor will report to OHCA.

Bruce Cummings, L+M president and chief executive officer, said that the terms were imposed under the requirements of a law that took effect late last year, shortly after the two hospitals submitted their application to OHCA in October.

The law places hospitals under greater scrutiny during the transition period after an affiliation is approved to ensure that patient costs and services are maintained and financial requirements are met.

That law also was not in effect when the region’s other major health care provider, The William W. Backus Hospital in Norwich, joined the Hartford HealthCare network in 2012.

“We agreed to the conditions because it was consistent with the transparency and price neutrality we said we’d provide,” Cummings said during an interview Friday, after an afternoon meeting with leaders from the L+M network, which includes The Westerly Hospital and the Visiting Nurse Association of Southeastern Connecticut, about next steps.

A transition team is being formed to integrate processes and coordinate services between the two hospital networks, he said.

Another team is being formed to guide the merging of L+M’s physician group, L+M Medical Group, into Yale-New Haven’s Northeast Medical Group by Jan. 1.

A third team will focus on strategic planning, expansion of clinical services and physician recruitment.

Under the terms of the agreement, L+M is required to recruit eight new primary care doctors to the region.

Cummings said patients are not likely to discern any immediate changes, although new signs with a new logo will be replacing the existing ones in the weeks ahead.

Installation of a new electronic medical records system that matches the Yale-New Haven system has already begun. That process began independent of the affiliation, Cummings said, but the completion will now be delayed until early next year to add new features available through the Yale-New Haven network.

“The biggest thing folks will notice is when they start seeing new services and new doctors in this area,” Cummings said.

Throughout the process, the two hospital networks have been calling their new relationship an affiliation in official OHCA documents.

OHCA, however, refers to it in documents both as a “transfer of ownership” and as an affiliation.

Marna Borgstrom, president and chief executive officer of Yale-New Haven, said the hospitals consider it an affiliation because L+M will retain its independent license and separate board of directors, payroll and other areas.

The Yale-New Haven network includes two other affiliated hospitals, Bridgeport Hospital and Greenwich Hospital, and one acquired hospital that no longer has independent status, the Hospital of St. Rafael.

Borgstrom also said the new relationship builds on longstanding ties between the two hospitals. L+M and Yale-New Haven have had partnerships in clinical areas since the 1970s, she noted.

Patients will see no change in the types of insurance accepted by either hospital, she said.

Borgstrom emphasized that local access to services will be enhanced, not diminished, by the agreement, and that L+M will retain local leadership.

“It’s important to have clear, visible local leaders” who will report to Yale-New Haven, she said.

Cummings said that while no immediate changes are planned for his role, he is considering future options that are not related to the OHCA decision.

“I turn 65 in a few weeks,” said Cummings, who has headed L+M for 11 years. “It’s not uncommon for people in their mid-60s to be thinking about the next chapter in their life. But I’m not ready to make any kind of announcement.”

In response to the approval, a coalition of more than a dozen hospital unions, health care and consumer advocacy and civil rights groups released a statement Friday stating that they were “closely examining” the terms and conditions.

During the review process, coalition members expressed concerns that health care costs would rise and access to care would decline as a result of the affiliation, and called on regulators to ensure that any agreement would protect patients.

The agreement released late Thursday is a complex document that will require much analysis, evaluation and deliberation by the coalition, the statement said.

“It is vital to assure accountability for the settlement’s community access, affordability, healthcare investment and workforce protections — and that they are both strong and enforceable,” coalition member Dr. Stephen Smith, a member of the National Physicians Alliance, said in the statement.

The group also has an “immediate concern” that regulators released the agreement as a final order that took effect at midnight Friday, “without the opportunity for the community to digest it and offer comment.”

“We will continue our review to determine our next steps to ensure the health of our community,” Smith said.

In contrast to the caution expressed by the coalition, Dr. David Reisfeld, immediate past president of the L+M medical staff, said he was pleased that the decision enables L+M to move forward with greater stability.

“For me personally, it’s a sigh of relief,” he said. “It’s a necessary thing that ensures the survival of the hospital.”

Hospitals nationwide are consolidating into larger networks to achieve cost efficiencies, said Michelle Sharp, spokeswoman for the Connecticut Hospital Association.

“Hospital integration has been increasing in Connecticut and across the country,” she said. “We expect this trend to continue.”

Cummings said L+M will remain a lower-cost alternative to Yale-New Haven, which as an academic medical system has more built-in expenses.

“They’ll be investing in more clinical services here so people can get that care locally,” Cummings said, referring to the $300 million the larger network has pledged to invest in L+M.

With increasing pressure for hospitals to cut costs, both L+M and Yale-New Haven will see costs savings as a larger network, with the ability to economize on supply purchases, contracted services and corporate services such as malpractice insurance coverage, Cummings said.

In the agreement, OHCA said many of the conditions were being imposed to "ensure that the proposed transfer of ownership does not adversely affect health care costs” and also ensures patient access and financial feasibility of the hospitals.

Conditions of the agreement include:

• L+M will submit a health improvement plan that outlines actions that will be taken in response to the findings of an ongoing community health needs assessment to OHCA.

• Within 180 days, a plan will be submitted to the state on how health care services will be provided at L+M for the next three years, including any consolidation, reduction or expansion of services.

• Within 180 days, the new network will submit prices charged for the 50 most common inpatient and outpatient services. The same information should be provided for the next three years.

• Yale-New Haven will report to OHCA on the capital investments made to L+M and its affiliates.

• The network will submit a “financial measurement report” to OHCA twice a year.

• L+M will adopt Yale-New Haven’s more generous charity care programs for providing care to needy patients. Any changes in charity care must be reported to OHCA.

• L+M will add more services for non-English speaking patients.

• A community representative will be added as a voting member of L+M’s board of directors.

• For the next three years, the boards of L+M and Yale-New Haven will conduct a joint meeting twice a year. It will be followed by a public meeting in which local residents will hear a report about L+M, and can ask questions and make comments.

• L+M must maintain its emergency room services, cardiology, elective PCI (percutaneous coronary intervention) procedures, inpatient behavioral health, obstetrics and gynecology, critical care and oncology services, among others.

• All union contracts will continue to be honored.

• L+M will maintain its wage and salary structures.

j.benson@theday.com