Rhode Island hospital regulators considering whether to approve Lawrence & Memorial Hospital's purchase of The Westerly Hospital have asked L&M to answer questions about recent layoffs, a $3.2 million budget gap and a 2010 incident involving the death of a child with a ruptured appendix.

"It's part of the process," Mike O'Farrell, spokesman for the New London-based L&M, said Thursday. "We've provided them with a significant amount of information, and they asked for more and we gave them more. Our goal is still to complete the sale as soon as possible, hopefully by the end of January or early February."

Spokesmen for the Rhode Island Department of Health and the Rhode Island Attorney General's Office, the two agencies being asked to approve the sale, said Wednesday that L&M's application is not considered complete. Once it is, the agencies will have 90 days to render a decision.

In addition to the three issues raised in recent letters to L&M from the two agencies, questions also are being raised about the future of obstetrics services at The Westerly Hospital, said Jan Salsich, president of the union that represents nurses at the Rhode Island facility. Both the union and the Westerly residents' committee reviewing the sale are still in favor of the sale going forward, she said, but are concerned that obstetrics services at Westerly Hospital may be phased out before the sale is final.

As part of the court-approved agreement worked out between the special master for the Westerly Hospital receivership and L&M, the New London hospital agreed to maintain all services that are in place at the smaller hospital at the time of closing for at least two years.

Dr. Andrew Neuhauser is one of just two obstetrician-gynecologists remaining at Westerly Hospital. Two other obstetrician-gynecologists and two midwives who had been at Westerly left during the receivership process, which began in December 2011.

"The two remaining obstetricians are very concerned about the course of events, and we're wondering what the future holds," said Neuhauser, who has been in practice for 23 years.

Neuhauser said his partner, Dr. Robert Greenlee, is "a senior obstetrician."

O'Farrell, the L&M spokesman, said L&M has offered employment to the two remaining obstetricians, and referred further questions to the special master, attorney Mark Russo, who is in charge of Westerly Hospital until the closing. Russo could not be reached for comment.

"We are committed to keeping all services existing at closing for at least two years," O'Farrell said.

In the letters to L&M, the Rhode Island agencies referred to a 2011 consent order between the New London hospital and the Connecticut Department of Public Health. Under the consent order, L&M agreed to correct a series of violations found by public health department inspectors after an April 2010 incident in which an 11-year-old girl died after her appendix ruptured.

William Gerrish, Connecticut Department of Public Health spokesman, said a copy of the consent order was provided to counterparts in Rhode Island.

"We discussed our findings with Rhode Island health officials, informing them that DPH has conducted monitoring visits of the hospital during the period of the consent order, which will end in March 2013," he said. "The hospital has been in full compliance with the terms of the order."

The Rhode Island officials also asked L&M about the layoffs of 14 full-time and eight part-time employees, announced in November, and the $3.2 million budget gap L&M cited as the reason for the layoffs. Eight of those laid off worked in clinical positions, the Rhode Island officials noted.

In the explanation given when it announced the layoffs and budget gap, L&M officials said there had been a decline in inpatient volume in the 2011 fiscal year, cuts in Medicare and private insurance reimbursement income, a continuing need to invest in technology for the electronic medical records system and rising employee benefits costs, among other factors.

O'Farrell said Thursday that L&M understands why the Rhode Island officials consider the issues raised in the letter relevant to their deliberations, and is confident it can provide satisfactory explanations.

Salsich, the nurses' union president, said the union will ask the regulators to formulate a specific definition of how services at Westerly Hospital are to be maintained by L&M, so that there will be no ambiguity about whether weakened services, such as obstetrics, would be preserved.

"It could be very easy to slip out of that," she said.

The regulators' questions, she said, "are perfectly appropriate to be looked into. But we're hopeful everything will move forward and still think it'll be a positive thing for us."

j.benson@theday.com