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L+M, Yale-New Haven move toward affiliation

The proposed affiliation of the larger of southeastern Connecticut’s two hospitals with the much more expansive Yale-New Haven Hospital network took a significant step forward this week when the parent organizations of Lawrence + Memorial Hospital and Yale-New Haven filed documents seeking the approval of state regulators.

The 603-page application, filed Wednesday with the state Office of Healthcare Access, begins what is expected to be a year-long process of reviews, public hearings and ultimately a decision about whether L+M and its affiliate, Westerly Hospital, will become part of the Yale-New Haven network that includes Yale-New Haven Hospital, Greenwich and Bridgeport hospitals and the Northeast Medical Group.

If approved, the Yale-New Haven system would add L+M’s 280 beds and Westerly’s 125 beds, plus both hospitals’ outpatient facilities, to its nearly 2,000 hospital beds and affiliated outpatient facilities to extend its network all along the coast and southern half of the state.

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

Along with L+M and Westerly hospitals, also folded into the new affiliated entity would be the Visiting Nurse Association of Southeastern Connecticut and the L+M Medical Group.

Both L+M and Westerly would, however, retain their separate hospital licenses and boards of directors, with representation from Yale-New Haven added. The two hospitals would retain their names, L+M spokesman Mike O'Farrell said.

Exactly how the Yale-New Haven affiliation would be referenced in the “hospital branding” has not yet been determined, he said.

Donations made to L+M and Westerly would remain with those hospitals, as each hospital's endowment funds and investments also would remain under local control, O'Farrell said. 

Along with the affiliation filing, L+M and Yale-New Haven also submitted a separate 212-page application to merge Northeast Medical Group, with 600 physicians, with LMMG, which has about 70 physicians.

The merger would be required under a state law that allows a hospital system to have only one associated medical foundation.

In the affiliation documents, L+M and Yale-New Haven assert that hospitals effectively are being forced into larger networks by increasing demands of federal health care reform for “greater value with lower reimbursement.”

As a larger system, the documents say, the two would have greater access to resources and expertise needed to remain strong and continue to provide access to primary and specialty care to their communities.

No closures or reductions of any services currently offered by L+M are planned, the documents say.

In addition, Yale-New Haven has committed to provide $300 million in resources to L+M and Westerly hospitals over the next five years. Investments would be made in a new electronic medical records systems, among other areas.

“There would be an initial investment at the time of the closing,” O’Farrell said. No final decision has been made on the areas that would receive the first investment, he said.

The affiliation would give L+M and Westerly patients greater access to specialty care available through the Yale-New Haven system, the documents say.

It also would improve care coordination, avoid duplication of services and enable L+M and Westerly to undertake “population health initiatives” — those that address the region’s most pressing public health needs, according to the documents.

Both hospitals would be able to cut costs by achieving operating efficiencies and savings in areas of “non-clinical shared services,” the application states.

“Opportunities will be identified to centralize some back office services and L+M Hospital stands to benefit by achieving cost efficiencies that it would not have as a standalone small hospital system,” the application states.

As Yale-New Haven affiliates, L+M and Westerly hospitals would be better able to attract and retain physicians and have greater financial stability, the documents state.

They note that the affiliation would build on the established working relationship between L+M and Yale-New Haven.

L+M currently has clinical affiliations with Yale-New Haven for heart and vascular care, radiation oncology, neonatology, pediatric hospitalists, the pediatric emergency department, neurosurgery and telestroke services.

If approved, the affiliation of L+M and Yale-New Haven would continue a 10-year trend for smaller community hospitals joining larger networks, including the affiliation of The William W. Backus Hospital in Norwich, with 201 beds, with the Hartford HealthCare network in 2014.

The trend has been fostered largely by insurance reimbursement practices.

Medicare, Medicaid and insurers that provide the main sources of revenue for hospitals increasingly favor 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.

The filing states that L+M considered seeking an affiliation with Hartford HealthCare, but because of its affiliation with Backus, “this was not viewed as a viable option.”

“Consideration was also given to more distant hospitals and locations such as Boston and New York, but there was considerable concern about patients migrating out of Connecticut and that the distance might be a barrier to achieving substantial efficiencies,” the documents state.

L+M’s long history of collaboration with Yale-New Haven made it the logical choice when L+M’s board directed hospital administrators early this year to pursue an affiliation with a larger network.

In addition, the documents state, L+M and Yale-New Haven are both nonprofit hospitals that share similar values and cultures.

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.

In addition to the L+M-Yale-New Haven affiliation filing, state regulators also are considering applications for two hospital acquisitions.

A for-profit hospital company, Prospect Medical Holdings, has submitted two filings to acquire the Greater Waterbury Health Network, which includes Waterbury Hospital, and the Eastern Connecticut Health Network, which includes Manchester Memorial and Rockville General hospitals.

The L+M-Yale-New Haven filing includes more than 65 letters of support for the affiliation.

The letters are from state lawmakers from Greenwich to New Haven to southeastern Connecticut, as well as mayors, first selectmen and heads of chambers of commerce from communities from Fairfield County to Westerly.

New London City Councilor and mayoral candidate Michael Passero also sent a letter of support, along with more than a dozen nonprofit organizations and businesses including Dominion Resources, owner of the Millstone Power Station in Waterford.

“It shows how important this is, and that people understand the need for the hospitals to remain strong,” O’Farrell said.

j.benson@theday.com

Twitter: @BensonJudy

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