Lawrence + Memorial Hospital's bid to acquire The Westerly Hospital cleared a key hurdle on Tuesday, when a Rhode Island Department of Health panel voted to approve L+M's application.

Twelve members of the Health Services Council of the Rhode Island health department voted in favor of the application, while two members abstained and one member recused himself. The application now goes to Michael Dexter, chief of Health Systems Development for the department, for a final review and determination, Dara Chadwick, spokeswoman for the health department, said.

Reviews are also pending with the Attorney General's Office and a separate health department panel considering the application under the Hospital Conversions Act, Chadwick said.

L+M spokesman Mike O'Farrell said the hospital is hoping for a final decision "as soon as possible."

The vote on Tuesday came after Dr. Robert Crausman and Harborview Consulting presented reports to the council favoring the merger. Crausman and the consulting firm were asked to analyze the financial, health care and business aspects of the offer. A committee of the Health Services Council also issued a report favoring approval of L+M's application.

The committee noted patient quality and safety initiatives at L+M, quality evaluations that rank with peer hospitals, and operating margins that are generally above average for similar institutions.

In his report, Crausman examined both the offer itself and issues raised by the Connecticut Department of Public Health pertaining to care at the New London hospital. Among the issues were multiple violations found at the New London hospital in 2010, resulting in a corrective action plan and consent order that was completed in March, and a second site visit by health department officials this year on behalf of Medicare.

The recent inspection was prompted after a health department official visited L+M in January and reported that a "dummy drip chamber," a calibration device, was present in the dialysis unit. The device is intended only for biomedical engineering and not for patient use, and could result in serious patient harm if used, according to the health department.

The chamber was removed immediately and a plan of correction submitted.

As a result of the finding, however, the Connecticut health department did a full survey of the hospital and on March 28 notified L+M of several deficiencies that are being reported to Medicare officials, said William Gerrish, spokesman for the health department. L+M was directed to submit a plan of correction by Thursday.

"We're awaiting a plan of correction, and it'll be up to (Medicare) whether they want to issue sanctions," Gerrish said.

The deficiencies involve use of restraints on patients who are combative or violent; hemodialysis data that was not presented to the hospital's Quality Council; ventilator management; use of side rails on beds in the psychiatric unit; and incomplete medication orders for two patients, among other issues.

O'Farrell said L+M is addressing all the issues raised and that none will affect the pending purchase of Westerly Hospital.

"They (the state health department) came in here with a fine-toothed comb, and now our job is to put forward a correction plan," O'Farrell said. "Some of the issues were rectified on the spot and others will require more work."

In his review, Crausman said the findings were serious but "are of the type commonly identified on hospital inspection surveys and should be readily corrected."

The recent Connecticut health department survey, he said, was "somewhat reassuring."

He concluded that L+M "has demonstrated that it has the clinical, administrative and board level leadership, established the infrastructure and expertise requisite to fostering a culture of patient safety and quality as it acquires (Westerly Hospital)."

j.benson@theday.com