Building plan still possible

The service union says financial woes are a revenue problem, not a cost problem.
By WILLIAM K. ALCORN
VINDICATOR STAFF WRITER
YOUNGSTOWN -- Forum Health's plan to build a for-profit hospital in a joint venture with physicians and private investors is still alive, despite the health system's acknowledged financial problems.
According to a report made public earlier this month by Moody's Investors Service, Forum's proposed joint venture to build a for-profit hospital, of which Forum would own 30 percent; some 120 physicians, 40 percent; and a private investor, 30 percent, is risky.
John Gonda, Forum spokesman, said the agreement signed authorized an external feasibility study on the project, not the building of the hospital. At this time, there are no definite plans in place.
However, Gonda said the feasibility study is expected to be done in a couple of months, at which time Forum will know more about the direction it will take with that project.
Investors
Gonda said he could not identify the physicians involved, but the private investor is Edward Muransky, owner of the Muransky Co. and Southwoods Surgery Center in Boardman.
Muransky was not available to comment Thursday.
The hospital would not be the first for-profit venture for Forum Health, a nonprofit health care system.
It has had for-profit entities for several years, including Forum Health at Home, which provides hospice and home health care; Forum Health Services; and some medical imaging units, Gonda said.
A pharmacy, part of Forum Health Services at Forum's Beeghly Campus in Boardman, was closed in 2005 because it was not profitable.
Moody's is wary about Forum participating in the for-profit hospital joint venture, called Valley Hospital, saying it "poses a number of risks."
Moody's did not factor those risks into a recent downward revision of Forum's bond rating, from Baa2 to Baa3.
However, Moody's questioned Forum's ability to finance the project. The bond rating company said Valley Hospital has not identified financing sources and is "re-evaluating the project's size and service offerings."
Positive news
Not all the news about Forum's finances is negative, according to Moody's.
The health system has a slightly leading market position, with 44 percent; had an adequate system-wide cash-on-hand position as of Nov. 30, 2005; carries moderate debt for a corporation its size; and by hiring Wellspring Partners, showed a strong commitment to a financial turnaround.
The Service Employees International Union District 1199, which represents 1,400 service, maintenance, technical and professional employees at Forum, wants to help with the financial turnaround, but not by accepting wage and benefits concessions.
Cutting wages may be the easiest way to cut costs, but it is not the best way of addressing the problem, said District 1199 President Dave Regan.
Forum has a tradition of keeping up with the national average in employee wages and benefits, and that is in the best interest of the entire community, Regan said during a news conference Thursday.
The union believes Forum's financial losses, estimated at $21-$22 million in 2005, are more a revenue problem than a cost problem.
Regan said District 1199 would involve its national union and other unions at Forum, to help Forum officials develop a financial turnaround plan. We believe it would be a wise thing to arrive at a single plan to present to Forum management,"
"I think we have to begin the discussion by saying that this hospital matters. And, we have to involve the leadership of the entire community. We're all in this together," Regan said.
Nurses' group
Nurses at Forum Health are "saddened and deeply concerned" about the financial condition of the hospital, Eric Williams, president of Youngstown General Duty Nurses chapter of the Ohio Nurses Association, said.
Williams said the nurses at Forum are exceptionally well trained, with 54 percent of them becoming certified on their own initiative, compared to the national average of 22 to 24 percent.
Even Wellspring Partners, the consulting firm hired by Forum to lead a financial turnaround, was "blown away by our expertise," Williams said.
"We want to engage the hospital in honest and open conversation," Williams said.
"We are not trying to be adversarial in this situation. I don't know that at the end of the day it does any good," Williams said.
But, he said, "we would draw the line at anything that would compromise patient services and medical outcomes."
alcorn@vindy.com