Judge: Time is up for Forum

Creditors seek to activate plan to close or sell North Side unit

By PETER H. MILLIKEN

VINDICATOR STAFF WRITER

YOUNGSTOWN — Despite Tuesday’s setback in U.S. Bankruptcy Court, Forum Health’s president said he still hopes to reach agreement with the health system’s creditors on a reorganization plan.

“We are continuing dialogue on a reorganization plan. ...We are aiming for a consensual plan of reorganization,’’ said Walter “Buzz” Pishkur, president and chief executive officer of Forum.

Pishkur made his comments after U.S. Bankruptcy Judge Kay Woods denied Forum’s request for a 45-day extension of its exclusive time to file a Chapter 11 bankruptcy reorganization plan.

Forum’s creditors opposed granting the extension of the hospital system’s time to file a reorganization plan, which expired Tuesday.

Forum was prepared to file a plan Tuesday, but didn’t, because it would rather wait to achieve one that all of its creditors can agree on, Pishkur said.

Forum Health includes Northside Medical Center, Trumbull Memorial Hospital and Hillside Rehabilitation Hospital and numerous pharmacy, laboratory, home health care and rehabilitation subsidiaries.

The creditors will now develop their own proposed bankruptcy reorganization plan and ask the judge to appoint a trustee with health- care expertise to operate Forum, said Heather Lennox, the lawyer for MBIA Insurance Corp., the bond insurer, which is one of Forum’s creditors.

The creditors also will ask for implementation of a previously developed plan for the sale or closing of Northside Medical Center, which is the most financially troubled of Forum’s subsidiaries, Lennox said. She said, however, after court that the disposition plan, whose details are confidential, would “not mean an immediate closure’’ of Northside.

Pishkur said TMH and Hillside are profitable; and the pharmacy, lab, home health care and rehabilitation subsidiaries are all at a break-even point or slightly profitable.

Forum’s business plan shows that all of its hospitals and all of its other subsidiaries will be independently financially viable in 2010, 2011 and 2012, Pishkur said.

“Our creditors and lenders have basically one responsibility as they come into court, and that is the quickest collection of the money that is currently owed them,” Pishkur said.

“We have obligations to our community to provide service and access to care. We have an obligation to our employees. We have an obligation to our physicians, and, of course, we also have an obligation to our creditors and lenders,” Pishkur said in a news conference after court.

“The lenders have provided any number of forbearances, precisely because Forum is a chain of hospitals. It’s not just another business, so we’re trying to be very cognizant of the very special role that Forum plays in this community,” Lance Ignon, a consultant to MBIA, said after court.

Although Forum was unsuccessful in getting 45 more days of exclusive time to file a plan, Judge Woods granted Forum the right to use cash collateral through Oct. 20. Forum had sought to use the cash collateral through Dec. 31.

The cash collateral is the cash Forum has on hand for operations from the bondholders and secured creditors.

Pishkur said Forum will object to the appointment of a trustee. “I don’t think it’s merited,” he said.

Forum already has experienced operations under out-of-town consultants, who were considered experts in hospital turnaround, but it did not achieve its desired financial outcomes during their tenure, Pishkur said.

Under its current administration, however, he said Forum has obtained cost-saving concessions from all nine of its labor unions, identified other income enhancements and cost savings in its operations, and maintained excellent patient care.

“The problem is not our managers. It’s the ongoing challenges of providing health care in today’s volatile economy,” he added.

In court, Lennox said “snap-back” provisions, under which concessions in the union contracts expire over the next several years, will cause labor costs to rebound to pre-concession levels.

Lennox complained in court about what she said would be alarmingly low cash balances and a $15 million net cash burn in the final four months of this year.

Pishkur said, however, “To date, our cash is $6.7 million greater than the date of bankruptcy. Operations have contributed $15.8 million to this cash balance.” Forum filed for bankruptcy March 16.

“Northside continues to require funding from Trumbull [Memorial Hospital], with no apparent ability to repay the advance. As a result, both institutions remain at great financial risk,” Lennox wrote in a court filing.

Eric Williams, president of the Youngstown General Duty Nurses Association, which represents nurses at Northside, declined to comment after he attended the court hearing.

with other officials of the Ohio Nurses Association.

milliken@vindy.com