Despite boost, Forum seeks concessions

Forum's bondholders want to see labor concessions, said Forum's CEO.
By WILLIAM K. ALCORN
VINDICATOR STAFF WRITER
YOUNGSTOWN -- Forum Health has collected $575,000 in unpaid bills the past two months, but officials insist $24 million in concessions from its union employees is still needed to avoid possible bankruptcy.
In the June 5 edition of the Forum Flash, a weekly newsletter published by the health provider, officials credited improvements in the billing and collection process for the windfall in uncollected bills.
Further, hospital officials said that as of May improvements in payer contracts are projected to net an increase of at least $2 million a year, an amount that is expected to continue to grow as additional underpayments are identified.
But despite the bottom-line improvements, Dr. Keith T. Ghezzi, Forum's interim president and chief executive officer, said concessions similar to those imposed on nonunion employees earlier this year are needed from union workers.
Dr. Ghezzi said Forum's bondholders, who are owed $180 million, have made it clear that their cooperation in not forcing Forum into bankruptcy is dependent on Forum's securing labor concessions.
Forum could have been declared in default May 1, but bondholders gave it 30 more days to shape up its finances, Dr. Ghezzi has said.
Proportionate reduction
Because of the improvements reported last month, and because Forum itself has revised its original projected deficit for this year from $60 million to $47 million, a union official wants to know why the level of concessions demanded has not been reduced proportionately.
Dave Regan, president of District 1199 of the Service Employees International Union, which represents about 1,400 employees at Forum, has 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.
Until those questions are answered, the SEIU will not agree to concessions, Regan said.
Regan added the union received confidential financial statements for April that show Forum would have made a profit that month if not for $20 million in fees paid to Wellspring Partners, a consulting firm hired to create a financial restructuring plan for Forum Health.
Dr. Ghezzi said, however, the union's position is "tantamount to playing chicken, as when two vehicles drive toward each other as fast as possible to test who will be the first to steer away and avoid a collision."
Blames labor
"I've said it before, and I'll say it again. Labor costs are a large part of the problem [Forum's financial difficulties] and union concessions must be a large part of the solution," Dr. Ghezzi said.
Forum's greatest obstacle to financial recovery is that its operating costs are too high to turn a profit, Dr. Ghezzi said.
Labor accounts for half of these costs, and only some of Forum's financial ills can be addressed through efforts to create a leaner, more-efficient system.
In a recent statement, Regan said SEIU does not deny that Forum has financial problems.
"We are ready and willing to be constructive partners ... in keeping Forum out of bankruptcy. What we will not do is blindly accept Forum figures, projections and proposals without seeing the evidence," he said.
alcorn@vindy.com