Forum Health reports encouraging finances

Forum paid about $11
million to Wellspring
Partners and some $1.3
million to former president N. Kristopher Hoce.

By WILLIAM K. ALCORN

VINDICATOR STAFF WRITER

YOUNGSTOWN — Forum Health is on track to record an operating profit for the second year running.

After several years of operating at a loss, and paying $11 million to a financial turnaround consulting firm, Forum reported it had an operating profit of $16.6 million through the end of October.

Company officials said the health care system experienced a $23.7 million operating loss in 2005.

At the time, the major components of Forum Health were Northside Medical Center in Youngstown, Beeghly Medical Park in Boardman, Trumbull Memorial Hospital in Warren and Hillside Rehabilitation Hospital in Howland.

Since then, Forum has sold Beeghly Oaks long-term care facility and Beeghly Medical Park. And, a Tennessee firm is looking into buying TMH and Hillside.

Forum has released its 990 Form, which is required of nonprofit corporations by the IRS. The 990 details compensation, benefits and expenses paid to consultants and employees, including about $11 million to Wellspring Partners, and some $1.3 million to former president N. Kristopher Hoce.

According to the Forum statement, the system’s overall consulting and legal costs reflect higher-than-normal expenditures associated with the system’s turnaround efforts, labor negotiations and expenses related to various sales and regulatory processes.

These expenses account for the daily management and resources committed to Forum’s turnaround initiative, that included a comprehensive review, analysis of and improvements to Forum’s revenue cycle, managed care contracting, billing, organization design, purchasing, supply chain, facilities planning, market analysis and staffing.

These efforts achieved a $47.7 million in operating cost savings and revenue improvements over two years, said officials, who anticipate that costs related to these initiatives will drop sharply when Forum completes his work and stabilizes the system financially.

The encouraging financial news was reflected in a September report by Moody’s Investors Service in New York City.

Moody’s confirmed Forum’s B1 bond ratings and removed the company from the “Watchlist,” where is was placed for potential downgrade in June.

Among Forum’s strengths listed by Moody’s are: adequate systemwide consolidated cash position with $116 million, or 95 days of cash on hand, as of July 31, 2007; new contracts with its three primary unions that include wage and benefit concessions; and progress on selling the system’s assets, which if completed, would provide enough money, along with current cash, to handle its current debt of $175 million.

alcorn@vindy.com