Forum sale awaits state review, pact talks

August 11, 2010 at 12:10a.m.

Judge signs off on $120M purchase by CHS

By WILLIAM K. ALCORN

YOUNGSTOWN

Forum Health officially has a new owner, but its problems are hardly over.

After a nearly 17-month saga since Forum Health filed for bankruptcy in March 2009, U.S. Bankruptcy Judge Kay Woods approved the sale of the health-care system Tuesday to Community Health Systems for $120 million.

Steps still left in the process are the review and approval of the sale by the Ohio Attorney General’s office and contract negotiations between CHS and Forum’s unions.

Forum’s major facilities are Northside Medical Center in Youngstown, Trumbull Memorial Hospital in Warren and Hillside Rehabilitation Hospital in Howland.

The major objection, filed by the Ohio Nurses Association, which represents about 300 registered nurses at Northside and Hillside, was resolved when CHS agreed to offer all nurses represented by the union jobs at their same rate of pay, said Eric Williams, president of ONA’s Youngstown General Duty Nurses Association at Northside.

The original language in CHS’ purchase proposal said it would offer jobs to nurses “actively working” at the time of the sale, which Williams said would have left out a number of employees on certain types of leave from their jobs, including some union officials.

The $120 million sale price is reduced by $2.5 million, which will be reimbursed to Ardent Health Services for expenses incurred in making the so-called “stalking horse” opening bid of $69.8 million for Forum, and an additional $1 million in operating losses before the sale is finalized, which could be as early as September.

That will leave a net of $116.5 million, said Shawn Riley, Forum Health attorney.

Riley said the $116.5 million will be enough to pay in full the secured creditors, known collectively as the Consent Parties, and that there also may be money to disperse to unsecured creditors.

The charitable foundations of Forum’s Western Reserve Care System (Northside) and TMH should now be safe, said Walter “Buzz” Pishkur, former Forum chief executive officer and president, who was in court Tuesday.

The foundations’ assets, which Pishkur said was one of his major concerns, were pledged as collateral for Forum’s loans and could have been used to pay creditors if needed.

The attorney general’s role in the process is to protect the public interest in the sale of nonprofit organizations such as Forum Health. A representative for Ohio Attorney General Richard Cordray told the court the review would be done within the 60 days allowed by law or sooner.

Judge Woods, however, said she expects the review to be completed more quickly than that because much of the work was done when the attorney general reviewed Ardent’s proposal.

“If $69.8 million was satisfactory, then so should $120 million,” and there are other issues that don’t have to be started from scratch, the judge said.

In his presentation, Riley said Forum believes the sale to CHS will maximize the value of Forum’s assets and that CHS has the money to upgrade facilities and equipment.

In a written statement, Forum Health called the sale to CHS a “very positive step forward that represents the accomplishment of our objective of providing a more secure and stable future for Forum Health and continued access to high-quality health-care services for residents of the Mahoning Valley.”

Community Health Systems said it is looking forward to the final steps of the process, including meeting with and seeking the approval of the attorney general, said Tomi Galin, vice president of corporate communications for CHS. She said meetings with union leaders are scheduled this week and next.

“We look forward to working with CHS and getting contract negotiations completed,” said Thomas Connelly, president of American Federation of State, County and Municipal Employees Local 2026, which represents registered nurses at TMH.

“We’re hoping for a smooth transition, but I have confidence we’ll stand up for ourselves and our patients,” Connelly said.

Mayor Michael O’Brien of Warren, in a prepared statement, said the sale represents a continued commitment of health care in the Valley.

“I feel this news is positive for the sustainability of Trumbull Memorial Hospital, which is the largest employer in the city of Warren,” O’Brien said. “I anticipate the new owner and the hospital unions will engage in meaningful negotiations, which should result in positive relations with the employers as well as employees.”

Youngstown Mayor Jay Williams said CHS has asked for a fair opportunity to live up to its promise to keep the three hospitals open.

“We should take a cautious approach but be open-minded and fair and assist whenever and wherever appropriate,” Williams said. “We need CHS and we want them to be profitable.”