Sunday, November 22, 2009
Bankruptcy costs escalate for Valley health-care system
By WILLIAM K. ALCORN
VINDICATOR STAFF WRITER
YOUNGS- TOWN — Forum Health has piled up some $10 million in attorney, consultant and restructuring fees and expenses since the health-care system filed for bankruptcy March 16.
Forum is required to pay all costs for all parties involved.
The most optimistic estimate for when the health-care system could emerge from bankruptcy is January. In the meantime, however, the fees continue to pile up.
According to U.S. Bankruptcy Court records, attorneys and consulting firms representing Forum and various creditors have received or are seeking court approval for about $3.9 million in fees and expenses.
But, on top of that, Forum is responsible for an estimated $6 million in restructuring-related fees, not filed with the court, for items such as public relations, financial advisers, consultants, investment bankers, and a number of other items, according to Forum financial records.
Walter “Buzz” Pishkur, former Forum chief executive officer and president, said he does not know the extent of the costs associated with the bankruptcy and restructuring to date.
While he was CEO, however, Pishkur said one of the major reasons he wanted to get through the bankruptcy process as quickly as possible, along with minimizing disruption of the organization, is the costs that are Forum’s responsibility to pay.
“The angst in this, with these kind of fees and why we want to get out of bankruptcy as quickly as possible, is that this money could be and should be being put back into the system,” said Eric Williams, president of the nurses union at Northside Medical Center on Gypsy Lane.
Northside, along with Trumbull Memorial Hospital in Warren and Hillside Rehabilitation Hospital in Howland, are Forum’s major facilities.
“It seems some of the people involved in this want to drag it out. Why would you want to let go of something that pays $750 an hour for an interim CEO? How can you justify that? It just boggles the mind,” Williams said, referring to the wages being paid Forum’s new CEO Charles Neumann.
Williams’ union, the Youngstown General Duty Nurses Association, conducted a rally and march Thursday in downtown Youngstown to raise awareness.
“I think people are starting to realize the gravity of the situation and the potential impact on the community,” he said.
Some 1,400 people work at Northside, and Forum has a total of about 4,000 employees in Mahoning and Trumbull counties, who represent taxes for governmental entities and customers for businesses.
More importantly, Williams said, Forum facilities represent access and choice in health care.
The Forum Board of Trustees is in the process of evaluating bids for all or part of the health-care system, and are expected by Nov. 30 to decide if Forum will continue along a path of stand-alone reorganization or be sold to pay off creditors quickly.
If the decision is to sell, there will be more huge costs for Forum Health to bear.
For instance, in an agreement filed with the bankruptcy court, Forum has agreed to pay Houlihan Lokey Howard & Sukin, the firm that is seeking bids for Forum, a minimum of $1.25 million if a sale of all or substantially all of Forum’s assets occurs.
Further, if the sale price is up to $85 million, Houlihan Lokey would receive a minimum of $1,.75 million.
If the sale price is between $85 and $100 million, Houlihan would get 3 percent of the amount; and if the sale price is more than $100 million, Houlihan would receive 6 percent of the excess, according to court documents.
alcorn@vindy.com
FORUM HEALTH
Bankruptcy costs
According to U.S. Bankruptcy Court records, attorneys and consulting firms representing Forum and various creditors have received or are seeking court approval for about $3.9 million in fees and expenses from March 16 through Sept. 30.
Huron Consulting Group
March 16-May 31: Fee, $528,079, expenses, $30,816.
June 1-Aug. 31: Fee, $783,662, expenses, $44,927.
Grant Thornton
April 1-June 30: Fee, $411,353, expenses, $9,979.
July 1-Sept. 30: Fee, $338,025, expenses, $9,950.
McDonald Hopkins
March 16-May 31: Fee, $574,641, expenses, $25,471.
June 1-Aug. 31: Fee, $762,608, expenses, $17,947.
Alston & Bird
March 26-May 31: Fee, $149,934, expenses, $1,844.
June 1-Sept. 30: Fee, $196,741, expenses, $4,809.
Nadler Nadler & Burdman
No date given: Fee, $66,018, expenses, $1,716.
Source: U.S. Bankruptcy Court records