Bankruptcy threat fuels concessions call

A union official says massive concessions are no longer necessary.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Forum Health says it will file for bankruptcy protection "sooner rather than later" without concessions from its unions.
A letter to employees and physicians said Thursday that Forum isn't in immediate danger of a bankruptcy filing.
But Dr. Keith Ghezzi, interim president and chief executive of the troubled medical provider, added that lenders will force it into bankruptcy "sooner rather than later if they don't see real progress toward the goal of making Forum market competitive."
A union official said, however, that no concessions will be made until Forum provides concrete answers to several questions.
Dave Regan, president of District 1199 of the Service Employees International Union, said the union wants to know how many workers Forum expects to have, what services it plans on providing and what are its current financial projections.
What union chief said
The union has received confidential financial statements for April that show Forum would have made a profit that month if not for its consulting fees, Regan said.
Forum has said it expects to lose $60 million this year, but that projection was based on its performance in January and February, Regan said. With Forum's improved numbers for March and April, the loss for 2006 should be a fraction of $60 million, he said.
Union officials don't understand why Forum still is looking for $24 million in concessions, he said.
Officials with the Youngstown General Duty Nurses Association, the nurses union, could not be reached to comment.
Forum has stated it would reorganize and continue to operate if it files for bankruptcy.
Dr. Ghezzi said Forum's bondholders, who are owed $180 million, want to see Forum go further in reconfiguring its operations and be more aggressive in cutting costs.
He said he reported to the board of directors Wednesday that Forum has improved its cash collections and operational performance.
Seeking concessions
The board expressed concern, however, about Forum's debt burden and wage and benefit costs, he said. Concessions from unions are critical because Forum's employee costs are "considerably higher than the regional norm," he said.
"We continue to talk with the unions and remain hopeful that we can work together constructively to get the job done," he said.
The good news for Forum is that its bondholders are still willing to work with it.
Forum has said it is current on its bond payments, but its bondholders can declare the organization to be in default because its financial health isn't meeting standards set in loan agreements.
Forum could have been declared in default May 1, but bondholders gave it 30 days to shape up its finances. Dr. Ghezzi said Forum has been granted another temporary reprieve.
shilling@vindy.com