43
Forum Health owes its creditors $139 million, including $25 million that is unsecured.
Forum Health owes its creditors $139 million, including $25 million that is unsecured.
YOUNGSTOWN — Buying time to save Northside Medical Center is at the heart of Forum Health’s decision to file for bankruptcy protection.
Lenders wanted Northside closed, said Walter “Buzz” Pishkur, Forum president and chief executive officer.
While Pishkur would not discuss specific profits and losses for individual Forum entities, he said Forum Health lost $22 million in 2008 and $65 million in 2006, and made an operating profit of $7 million in 2007.
Despite the bankruptcy filing, Pishkur spoke of progress.
“We are not going out of business. In fact, we intend to expand,” Pishkur said.
He said plans for construction of a $1.3 million intermediate care center in Newton Falls are under way. He said that city and Forum each have applied for $650,000 grants to finance the project.
Pishkur said Forum plans to re-establish a presence in Boardman by the first quarter in 2010 with an immediate care facility in an effort to regain the conduit of admissions critical to revenue at Northside that was lost when Beeghly Medical Park was sold to Akron Children’s Hospital and Humility of Mary Health Partners.
“It was a mistake to leave Boardman. Whoever got us there first was brilliant. My focus now is to recapture that market and patient referral stream, which is crucial for Northside,” he said.
Business as usual in bankruptcy
The system’s day-to-day operations are expected to continue as usual during the reorganization process — including those at Northside Medical Center in Youngstown, Trumbull Memorial Hospital in Warren, Hillside Rehabilitation Hospital in Howland and Austintown Medical Park in Austintown. Employees will be paid for their work in the ordinary course of business before and after the filing.
He also said that during the last few years, Trumbull Memorial and Hillside Rehabilitation have either made a profit or broken even financially, but Northside Medical Center had continuous losses, Pishkur said.
“If pieces of the operation are not financially viable, we’ll deal with it,” he said.
Forum Health filed Monday for protection under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the Northern District of Ohio Eastern Division in Youngstown.
Hearings on motions related to the filing are scheduled for 2 p.m. today, before Judge Kay Woods, who will consider Forum motions to conduct daily business, such as paying bills and employee wages and benefits.
Forum owes its creditors $139 million, including $25 million that is unsecured, Pishkur said.
During a news conference Monday, Pishkur discussed a wide range of issues, including why Forum sought bankruptcy protection. He also detailed part of Forum’s financial plan to increase revenues and cuts costs over the next few months.
Recession’s impact
The prolonged local economic downturn and the national recession led to a severe cash flow problem, Pishkur said. It became clear that Forum had to take some action.
“We could either give up or file for Chapter 11 to gain more time for our business plan to work,” he said.
Pishkur said Forum has until Sept. 15 to file a reorganization plan with the court. The plan will include how Forum will be structured when it comes out of Chapter 11 bankruptcy, which he said he is hopeful will be by the end of 2009.
Pishkur said he could not guarantee there would be no layoffs, but he said that is not the first option. At the same time, he said, when 50 percent of operating costs is labor, “you can’t take that piece out” of consideration.
Recently, Forum instituted $2.8 million in cost-cutting measures that affect its 900-plus nonunion employees across the system.
Forum also has asked for millions of dollars in concessions, approximately 10 percent of wages, from its nurse and service employee unions at Northside Medical Center in Youngstown and unionized employees under the corporate umbrella, though no new agreements have been reached.
There was almost a sense of relief that “at least something was done,” said one union leader who discussed the bankruptcy Monday.
Union perspectives
Eric Williams, president of the Youngstown General Duty Nurse Association, which represents 450 nurses at Northside, said his group has given $10 million in concessions over the past few years.
“If we emerge out of this in a better position, then bankruptcy would be a good thing,” Williams said.
“I see Chapter 11 bankruptcy as a light at the end of the tunnel,” said Debra Bindis, staff representative for American Federation of State, County and Municipal Employee Union, which represents nurses and service and technical employees at TMH and elsewhere in the system.
The Service Employees International Union District 1199, representing some 1,200 Forum employees, said Forum has failed to respond to repeated financial information requests made by SEIU and has rejected calls for meetings with Pishkur.
Legislator disappointed
State Rep. Tom Letson, D-Warren, said he felt disappointed that Forum Health representatives were not more forthcoming with information regarding financial troubles.
“That information would help community members, as well as union members, understand the problems that they’re having,” he said.
In the last two contracts, District 1199 members made concessions of $13 million through wage freezes, reduction of paid time off, and increased contributions to health insurance, said Rob Johnson, District 1199 Hospital Division director.
Mike Stanney, a nuclear medical technician at Northside Medical Center who spoke on behalf of union employees, said he’s worked for Forum Health for 35 years.
He said union members will continue to work at making sure Forum Health never stops being a viable facility.
“This community can’t sustain good hospital care without Forum Health,” Stanney said.
Pishkur said Forum has about 4,000 employees, which makes it the second-largest employer in the Mahoning Valley, and key to the local economy. He said Forum has a $170 million annual payroll and pays $55 million a year in local, state and federal taxes.
“It’s important to keep that economic engine running, and equally important to keep the health care mission viable,” Pishkur said.
Pishkur underscored the importance of the need for the cooperation and support of the community and its leaders, staff and employees in Forum’s fight to stay alive.
“If we don’t have physicians willing to send patients, we won’t have a hospital,” he said.
The up side of bankruptcy
While filing for bankruptcy is not a message anyone wants to hear, there is an up side, he said.
“We’ll have the ability to run our business without the lenders hanging over us,” Pishkur said.
The Forum Board of Trustees approved filing for bankruptcy on Feb. 24.
Ohio Attorney General Richard Cordray told The Vindicator on Monday that he’s asked his office’s charitable foundation section to research how he can get assist the public regarding the Forum Health Chapter 11 bankruptcy. The answer will take a few days, he said.
The attorney general’s office has final approval over the sale of any nonprofit organization and in protecting the public’s interest, Cordray said. But the office’s involvement in a bankruptcy is “less obvious. If there’s a role for us to play, we’ll play it aggressively and protect the community,” Cordray said.
U.S. Rep. Tim Ryan said he has offered his help to the leaders of Forum Health and Humility of Mary Health Partners, Youngstown Mayor Jay Williams and Warren Mayor Michael O’Brien as well as union officials from both hospital systems.
“We cannot change the failed policies of the past that have compounded this particular predicament, but I will work diligently with the administration and Congress to shape federal policies that will have a positive impact on Forum Health, Humility of Mary Health Partners and the constituents we serve,” said Ryan, D-17, of Niles.
Ryan said he is hopeful that Forum Health will emerge stronger financially, and pledged his continuing commitment to aiding a system that delivers quality health care service to those to the community. The most important objective right now is that we all work collectively with management, labor and creditors to ensure that Forum Health is provided the foundation to continue as a sustainable hospital system,” Ryan said.
While bankruptcy is a message no one wants to here, the bottom line is Forum is “still in the game. We are not going out of business,” Pishkur said.
alcorn@vindy.com