Should TMH and Hillside be sold?

By William K. Alcorn

The right thing to do is sell Northside, says the man pushing to dissolve Forum Health.

WARREN — It’s a matter of survival.

So say both sides in the debate over whether financially stable Trumbull Memorial and Hillside Rehabilitation hospitals in Trumbull County should split from financially troubled Forum Health.

TMH and Hillside, in Warren and Howland, respectively, are the Trumbull County portion of the Forum Health system. Mahoning County’s major Forum facility is Northside Medical Center on Gypsy Lane in Youngstown.

Forum says TMH is making money, about $1 million a month, and that Northside is losing more than $1 million a month.

A recent study, ordered by the Ohio Attorney General’s office and paid for with public money, said Forum could not survive if the merger of Trumbull and Mahoning hospitals was dissolved.

Gus Polychronis, a Trumbull County businessman leading an effort to undo the 1999 merger of Western Reserve Care System (Northside) in Mahoning County and TMH/Hillside in Trumbull County into one system (Forum Health), and Lowell Johnson, Forum president and chief executive officer, discussed the situation in separate interviews.

The Trumbull County entities, TMH and Hillside, are propping up Forum financially. And yet, the Forum trustee board said it intends to sell Hillside and has twice signed tentative agreements to sell TMH, said Polychronis, owner of Thermolance Co. in Bazetta Township.

“If Northside fails and Forum Health goes bankrupt, that would shift all the debt burden to TMH and destroy it, too,” Polychronis said.

“If Forum sells TMH to a for-profit organization, as it tried to do twice in 2007, the money [proceeds from the sale] would be poured into Northside and the people of Trumbull County would be robbed of that money.

“Selling Hillside for $10 million or $12 million would not solve the debt, and it would rob the people of Trumbull County, who built that hospital, in part, with a tax levy,” he added.

“The right thing to do is sell Northside, take the proceeds from the sale and reduce the debt and shift the proportionate amount of remaining debt to TMH,” Polychronis said.

Northside could become a community hospital and reduce everything down to what works. It would be painful, but at least it would survive, he said.

Johnson said, however, that splitting TMH/Hillside off from Forum is not going to happen any time soon, if ever.

“We’re not letting anybody go until we have fixed the problems downtown [in Youngstown]. I hope there are some people of good will in the Mahoning Valley who want to preserve jobs and help their fellow man,” he said.

Further, Johnson said, “If I asked the Forum Board of Directors and they said yes to a split” it would only happen if the Ohio Attorney General and the debt holders also said OK.

“We’re in default on our debt, and we can’t change ownership or sell anything for more than $1 million without the lenders’ permission,” he said.

Johnson said the Forum board’s position is that it is not interested in selling TMH or Northside, but would consider offers for other assets, including Hillside, if they were in the best interests of TMH and Northside.

He said the perception that TMH revenue is being spent on Northside is incorrect. While the revenues of both hospitals are commingled for investment purposes, the money is kept separate in the books and what each hospital has is “tracked to the penny,” he said.

There are some common expenditures, but they are proportionate based on net patient revenue of each hospital, Johnson added.

But, Polychronis is not convinced.

In 2007, he said he began talks with Dr. Keith Ghezzi to end the merger. Dr. Ghezzi was Forum’s interim president and chief executive officer during a financial turnaround effort at Forum.

“Everything was on track, and we were set to start due diligence when Dr. Ghezzi left and things changed. I then pursued it with Johnson [who replaced Dr. Ghezzi] and he said he had the full approval of the board. We had progressed to the due diligence stage again when it fell off the table,” Polychronis said.

Due diligence is the process of investigating details of a potential deal, such as operations and management and verification of material facts.

Polychronis said his group has asked to meet with the Forum board and with the bond holders, but the Forum board has refused.

“There is no transparency. Why? What’s the big secret? The only information I got, I had to dig for. I had to go to the [Ohio] Secretary of State for the merger agreement after the Forum Board refused to give it to me,” he said.

Forum sold Beeghly Medical Park in Boardman at a loss, Polychronis said, and most recently sold Forum Health at Home. “It closed Tod Children’s Hospital. And what has it solved? Forum is still losing money,” he said.

alcorn@vindy.com