The region's two hospitals enjoyed some of the strongest financial health among the state's 29 hospitals in 2012, a new state report shows.

The Department of Public Health's annual report on the financial status of the state's hospitals shows that The Williams W. Backus Hospital in Norwich and Lawrence + Memorial Hospital in New London were among 16 statewide with five-year average total margins of revenues over expenses exceeding the statewide average of 3.46 percent.

Backus' margin for 2007 to 2012 averaged 7.16 percent - the highest in the state - while L+M's five-year average was 5.13 percent. For 2012 alone, Backus had the second-highest margin in the state at 12.98 percent, while L+M's total margin for that year was 7.53 percent, the report said.

The two hospitals also had the distinction in 2012 of having the highest number of days of cash on hand - a measure of financial strength and ability to keep up with bills and expenses - compared to the other 27 hospitals. L+M had 185 days cash on hand, while Backus had 159. The state average is 69 days.

L+M spokesman Mike O'Farrell said that while the report reflects the strong financial condition of the hospital last year, "it's important to know how quickly and drastically the numbers have changed." L+M has had three rounds of layoffs in the past year and made other program cuts.

Reimbursement cuts in Medicare and Medicaid have impacted the hospital this year, O'Farrell said, and inpatient admissions are also down due to changes in Medicare policies. "There are a lot of changes ahead and a lot of challenges," he said.

Sean Mawhiney, spokesman for Backus, said the hospital's strong performance in 2012 is a reflection of its "constant focus on improving quality and efficiency."

"That's been our formula and will continue to be moving forward," he said. "That's the reason we're where we are today."

The report notes that since the end of 2012, Backus has joined the Hartford HealthCare Corp., the parent company of Hartford Hospital, part of a trend toward affiliations and consolidation among hospitals. It also noted that L+M followed the trend in 2013 by purchasing The Westerly Hospital.

The trend toward larger hospital networks "may be the result of many factors including ... the current state of the national and state economy, reimbursement issues, strengthening of position in payer contract negotiations, and access to capital, as well as the upcoming changes related to Federal health care reform," the report said.

Overall, 2012 was a year of gains for state hospitals, with the vast majority seeing increases in revenues over the previous year, increases in net assets and average total margins. At the same time, however, hospitals provided more care that they were not paid for - up about $60 million to $663.5 million in 2012, the report said.

At L+M, uncompensated care was 2.1 percent of total expenses, down slightly from the previous year. Of that, at Backus, uncompensated care accounted for 2.2 percent of total expenses, also less than in 2011. The uncompensated care figures included $2.8 million in free charity care provided by L+M and $5.3 million in free charity care provided by Backus.

L+M, the larger of the two hospitals with 308 licensed beds and about 1,950 employees, had a higher percentage of patients covered by various types of government insurance programs compared to Backus. About 46 percent of L+M patients had Medicare or TriCare insurance and another 17 percent had Medicaid, while 36 percent had private insurance.

At Backus, with 233 licensed beds and about 1,542 employees, 34 percent of patients were covered by Medicare or TriCare, and 10 percent by Medicaid. About 55 percent had private insurance.

The two hospitals also differed in the numbers of patients coming to its Emergency Departments, though both saw increases over the previous year. L+M treated 82,665 patients at its emergency rooms at the main hospital and the Pequot Health Center in Groton, the sixth highest in the state. Of those, 76,140 were treated and discharged, and 6,525 were admitted.

Backus had the 12th highest number of emergency patients among the 29 hospitals. Of the 68,103 emergency patients who came to Backus in 2012, 60,738 were treated and released, and 7,364 were admitted. The numbers reflect visits to its main hospital and a satellite emergency room that opened in Plainfield in mid-2012.

j.benson@theday.com