Forum Health plans financial makeover

A turnaround plan is expected within 60 to 90 days.
By WILLIAM K. ALCORN
VINDICATOR STAFF WRITER
YOUNGSTOWN -- Nothing has been decided and everything is on the table when it comes to getting Forum Health out of its financial crisis.
The recovery plan could include closing part or all of Northside Medical Center, added Dr. Keith Ghezzi, Forum Health interim president and chief executive officer.
All facilities, all programs and all aspects of the organization are being evaluated as Forum Health develops a financial turnaround plan, Ghezzi said.
Describing Forum Health's turnaround as massive and one of the most challenging he has seen, Ghezzi nevertheless expects a plan to be ready in 60 to 90 days. He said Forum is projecting a $40 million deficit this year if changes are not made.
"We can't cut our way out of this. We have to grow some programs," Ghezzi said.
But cuts have been the order of the day since Wellspring Partners, a consulting firm specializing in health care system turnarounds, was hired in 2005.
What's being done
On Tuesday, during a meeting with area press, Ghezzi announced several actions and confirmed other moves that have already been made. They include:
This week, Forum's 1,300 management and nonunion workers were told that a health care premium share plan would be instituted over the next 60 days. Also, those same employees were informed that they would be moved from a defined pension plan, with guaranteed payments, to a 401(k) plan, and that a paid time-off bank would be established.
Ghezzi confirmed that an additional 10 or so corporate-level employees have recently quit or been fired. Their departures are in addition to those of the health system's former top executives, including N. Kristopher Hoce, president and CEO, and Henry Seybold, senior vice president and chief financial officer, who left earlier this year.
Ghezzi said the new Forum leadership would seek around $24 million in concessions from its 3,700 unionized employees to address its competitive disadvantage with Humility of Mary Health Partners. "We've announced no wage cuts to this point. However, we need to work with the union now to get savings," he said.
Ghezzi would not discuss how much Forum Health is paying Wellspring. However, the Service Employees International Union District 1199, which represents about 1,400 of Forum's employees, said it has learned that Forum expects to spend about $19 million in legal and consulting fees this year, including $14.9 million to Wellspring.
Ghezzi defended the use of an outside consultant and noted that the Forum Board of Directors, all of whom are local residents, has approved all the changes that are being made.
Forum chose to rent specialized expertise to help in the turnaround, believing it will be less expensive in the long run. Wellspring has a proven track record, Ghezzi said.
Challenges it faces
Some of the challenges noted by Ghezzi include:
Because of Forum's older facilities, it costs one-third more to operate than its major competitor, HMHP.
Wages and benefits are higher than those at HMHP.
Ghezzi was joined in the meeting with the press by Roxia Boykin, chief operating officer for Northside; Kevin Spiegel, chief operating officer for Trumbull Memorial Hospital in Warren; and Phillip Dennison, board vice chairman and president of Packer Thomas, certified public accountants and business consultants.
Dennison said the board thinks the turnaround needs to be done quickly. "That's why we hired Wellspring."
Still, he said the board did not enter the process expecting that most of its top executives would leave or be asked to leave.
"But as we got halfway through the process, we realized we needed a different direction ... executives that understand how to manage a turnaround," Dennison said.
The board gave two basic directions in achieving a turnaround: Leave no stone unturned; and establish a realistic time frame for the turnaround, Ghezzi said.
Dennison said the goal is to lay a foundation for profitability by the end of the year.
Forum needs to turn a profit, or have a surplus as it's called for nonprofit organizations, so it has money to reinvest in facilities and technology. Often financial problems translate into problems with quality of health care. However, that is not the case with Forum Health, Ghezzi said.
High quality health care has always been the board's top priority, Dennison said.
Ghezzi said the goal is to be as transparent as possible. "We have told everyone that when we have answers we'll share them," he said, referring to stake holders, including employees, the community, physicians who use the hospital, the hospital's bondholders, and legislators.
alcorn@vindy.com