Forum seeking more time to pay its bondholders

THE VINDICATOR, YOUNGSTOWN
By WILLIAM K. ALCORN
VINDICATOR STAFF WRITER
YOUNGSTOWN -- Forum Health is negotiating with its bondholders to lengthen the debt payback period rather than accelerate payments because of the health system's declining financial position.
Forum does not have the money to make payments if they are accelerated and therefore would violate the bond covenants, Dr. Keith Ghezzi, Forum's interim chief executive officer and president, said Thursday.
"In an acceleration position, some debts that were long-term can become current. No lender is interested in running a hospital. But they are interested in how we are going to pay them. We don't want to, but we might have to sell some of our assets" to satisfy the debt, Dr. Ghezzi said.
Dr. Ghezzi said Forum's cash-on-hand has deteriorated from $189,600,000 in September 2004, to $163,300,000 in January 2006. Forum's debt is $180,000,000.
Forum hopes that the reduced operating costs and increased revenue initiatives identified to date, which will add about $24 million to the bottom line this year and perhaps more in future years, will be enough to persuade the bondholders to hold off.
Profit improvement over the next 60 days is essential to buy the time necessary to implement a long-term strategy, Dr. Ghezzi said.
"If we can't reach agreement with the bondholders, bankruptcy while continuing to operate is an option," he said.
Concessions sought
Dr. Ghezzi said the projected savings from a wage freeze and a changed benefits package for nonunion employees will save $5 million a year. He reiterated that similar concessions from the unionized employees, which he said would save $24 million to $25 million, are necessary to put the organization on the path to financial solvency.
Meetings with employee unions are scheduled for next week, he said.
However, leaders of the Service Employees International Union District 1199, which represents workers across the system, and the Youngstown General Duty Nurse Association, which represents registered nurses at Northside Medical Center and Tod Children's Hospital, remain unconvinced that concessions are necessary.
Though they have been meeting with Forum management, they contend that they have not received all the information necessary to enter into formal negotiations on concessions.
In Trumbull County, Tom Connelly, president of the American Federation of State, County and Municipal Employees/United Nurses of America Local 2026, which represents nurses at Trumbull Memorial Hospital in Warren, said Forum Health has "complied with our requests for information and disclosure."
Important matters
"While we may not agree with all the proposed solutions, we are continuing talks with our focus first on job preservation, and secondly, and most importantly, the continuation of delivery of health care to the community we serve," Connelly said.
"We expect TMH to recover from these troubled times, and in fact expand to an even greater presence in our Valley," Connelly said.
Dr. Ghezzi noted other areas of concern:
When HMHP's new hospital on McClurg Road in Boardman opens next year, Forum's Mahoning County operations will lose an estimated average of 50 patients a day, he said.
Also, Northside Medical Center and TMH will have accumulated deferred maintenance expenses of $17.5 million and $9.8 million by 2013, he said. Because of the age of the buildings, he said Northside and TMH have annual building operating costs that are 33 percent above the industry average.
alcorn@vindy.com