Sunday, November 8, 2009
By Todd Franko
By week’s end, a clearer future for Forum Health will start to emerge.
The submission of purchase bids for the hospital group are due Friday, and with that, the bumpy and bruising path that Forum has been on for the past several years should hit a crossroads.
Sure, it’s possible Forum will not be sold, and the hospital’s own reorganization plan crafted over the last several months will win creditors’ hearts, which is what some insiders would like a chance to do.
And the Cleveland Browns may also win the Super Bowl this year.
The reality is that the creditors who are owed millions of dollars have Forum in this position for one reason only — the immediate cash impact of a sale.
Here’s the best map I can offer based on what I’ve been told (I’m not a bankruptcy expert and I did not stay in a Holiday Inn Express last night).
At least four potential bidders have completed Forum site visits.
Hospital representatives would not identify the groups, and Forum’s neighbors, Humility of Mary Health Partners, could not, per the rules, disclose if they were among the interested parties.
Hospital lawyers said this Friday’s bids will set off a two-week evaluation by Forum’s board of directors.
The secured creditors need about $84 million to satisfy what they’re owed, after a reserve fund is factored in. With fees and other debt, the cleanest path to an outright sale would need to be a bid in the $90 million-$100 million range.
Such a bid was laughable, according to some, just a few years ago. But now there is higher confidence with changes and concessions attained in the past year.
With the offers, the Forum board is still in charge — only with the subtle weight of bankruptcy, a bankruptcy judge and a new creditors-friendly CEO in the mix.
If a bid comes in above the $90 million mark, a sale is easier. And if two such bids come in, the board has the ability to impress upon the court which one it thinks is better for everyone — not just the creditors.
If a bid comes in below $90 million, then the process gets sticky. Some Forum officials believe a low bid would give life to their reorganization plan as that may have more appeal to creditors than the sale bids.
The board must remember that they are in the driver’s seat. They still are the board. Key to any future they consider has to be the future of Northside — an open Northside.
It’s past its time in an over-bedded area, say some. It’s under-capitalized, say others.
But what Northside means to the Valley is unquestioned:
U1,400 people collect a paycheck from there.
U12,000 admissions per year.
U$21 million annually in charitable medical care offered.
U6,000 people serviced for dental care via the dental residency program.
UThe residency program draws physicians to the Valley who eventually launch their own practices.
UThe Valley’s long-awaited community college has started making a home there, creating what one person called an Ohio first: a community college attached to a working hospital.
UMore than 7,000 emergency room visits annually.
All of this — and a solid business plan to make it self-sufficient if the creditors can just be fulfilled from money owed by years of past missteps.
Buzz Pishkur left his Forum CEO role with his head high. As Forum CEO, he seems most proud of what he thinks he pulled off at Northside, which is essentially a plan for it to succeed as is.
The bids this week will make him brilliant — or wrong.
Not many folks share his optimism, but they are outside the operations. What they see for Northside, if it stays open at all, is definitely a smaller operation.
Of that mindset is Youngstown Mayor Jay Williams, whose city would lose 1,400 jobs and the resulting income tax should Northside close. Williams probably faces a no-win scenario if Northside closed: He also sits on the board of directors of HMHP.
“People will accuse me of just wanting what’s best for St. E’s,” Williams said. “I have a larger concern with who will have the plan to keep Northside open.”
Williams said he’s done his best to stay an active HMHP board member but stay outside the talk regarding Forum. But sitting where he does, he has a view and a vision. He would like to see Forum and HMHP sit down and hammer out a sale. He sees it as the best hope to keep Northside similar in size to what it is today.
That belief comes from years of hearing HMHP what-if scenarios if Northside ever closed or could be purchased by HMHP.
Though Forum staffers envision an HMHP-led Northside with just 200 or so jobs remaining, Williams believes that the 200 number would be the jobs lost. He views that scenario as far superior to a future at Northside in the hands of a nonlocal buyer.
“That is the worst of all scenarios,” Williams said, rattling off a list of closed hospitals in Northeast Ohio that failed after purchase by a private medical group.
We’ll have to wait and see. The bids come in this week. A direction, and possibly even an agreement, will be reached by Nov. 30, and shortly thereafter, we will know the future of the Valley’s health-care system.