What's next for Forum?

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By WILLIAM K. ALCORN

alcorn@vindy.com

YOUNGSTOWN

Ardent HEALTH SERVICES’ offer to buy Forum Health for $69.8 million and keep its three hospitals operating has community leaders and Forum employees excited about the future.

The excitement was generated by a motion filed Thursday in which Forum petitioned the U.S. Bankruptcy Court Northern District of Ohio for permission to sell its assets to Ardent, a for-profit health-care system with headquarters in Nashville, Tenn.

Included in Ardent’s offer for Forum is a pledge to spend $50 million to $70 million over five years to upgrade Forum’s infrastructure and aging medical equipment.

Less excited about the proposal, however, was MBIA Insurance, the company that insures Forum’s major secured lenders.

“We are disappointed that the debtors [Forum Health] violated their bankruptcy court agreements by filing this motion without first obtaining the lenders’ consent,” said Brenda Adrian, a company spokeswoman. “But, we nevertheless expect the debtors to conduct an open and robust auction process. If the court finds that the sale does not maximize value, MBIA’s standalone reorganization plan provides another path to successfully conclude these cases.”

In a statement Thursday morning, Forum described its motion to sell its assets to Ardent as the “beginning of a complex process to exit bankruptcy.”

Forum, a nonprofit organization, filed for Chapter 11 protection under the U.S. Bankruptcy Code on March 16, 2009.

Forum’s motion came after it and Ardent had signed an asset-purchase agreement outlining the proposed sale of Northside Medical Center in Youngstown, Trumbull Memorial Hospital in Warren and Hillside Rehabilitation Hospital in Howland.

In addition to the hospitals, Ardent also would buy Forum’s physician group, two diagnostic and imaging centers and its five laboratory sites.

WHAT HAPPENS NOW?

Bankruptcy Judge Kay Woods will determine the process for reviewing the agreement, as well as any competing bids or objections to the agreement. This process may take several months to complete, according to the joint statement from Forum and Ardent.

This is not a “done deal,” said Kevin Gwin, vice president of communications for Ardent, who noted the decision is ultimately up to the court.

“We are offering a solution to keep these hospitals open, and we’re hoping the court determines ours is the best solution for the community,” he said.

Phil Dennison, Forum trustee board chairman, said the board “concluded that the best possible outcome for Forum Health, our creditors and the community is a sale to Ardent, which is known for investing in quality care.”

“This is very exciting news for our employees and the people of the Mahoning Valley, and we are hopeful that the court and our creditors will adopt the result of our sale process as a solution for our hospitals, our caregivers and our patients,” Dennison said in a statement.

ARDENT’S POSITION

David T. Vandewater, Ardent president and chief executive officer, said his company sees Forum’s and the Valley’s strengths and future potential.

“We believe in Forum Health and its future as a vibrant contributor to the region, as a provider of quality health care and as an important employer,” he said.

Ardent believes the Valley’s economy is on the upswing with announcements of expansion at V&M Star and General Motors Lordstown Complex, Gwin said.

Ardent hopes to be the next name people point to as part of the Valley’s economic resurgence, he said.

In additional to seeing a community turning around, Gwin said Ardent found a great deal of physician support for Forum during its due diligence process. Also, he said, despite being in the bankruptcy process for 15 months, the hospital system continues to treat a lot of patients and offer good quality health care and has retained a good market share.

That speaks to the quality of the physicians and Forum’s employees. “They do great work,” Gwin said.

He said it is too early in the process to talk about possible job cuts. He said, however, that aspect has been worked out with Forum’s unions. He would not discuss details, saying the memorandums of agreement are confidential at this point.

In its statement, Forum said membership of the three unions representing Forum’s 3,500 employees — the Service Employees International Union, the American Federation of State, County and Municipal Employees and the Youngstown General Duty Nurses Association of the Ohio Nurses Association — have indicated support for an Ardent purchase.

COMMUNITY LEADERS’ REACTION

Community leaders are also solidly behind the purchase.

U.S. Rep. Timothy Ryan of Niles, D-17th, said he strongly supports the sale.

“[Thursday’s] court filing represents the culmination of many months of collaboration and sacrifice to ensure a more stable and secure future for the thousands of hardworking men and women employed by the Forum Health system,” Ryan said in a prepared statement.

Warren Mayor Michael O’Brien said the news helps stabilize his city’s largest employer and one of its most important service providers, Trumbull Memorial, and hopes the creditors and bankruptcy judge approve the sale.

“They’re eager to be a community partner,” O’Brien said of Ardent, and “the employees have done their part through numerous rounds of concessions.”

Youngstown Mayor Jay Williams called the filing a “significant step in turning toward a new chapter for Forum Health and our community. Based on the meetings and discussions I’ve held with officials from Ardent, I am convinced that their commitment to the city of Youngstown and the Mahoning Valley is genuine.”

ATTORNEY GENERAL’S ROLE

One of the hurdles to be cleared is approval by the Ohio attorney general’s office of any deal to sell the nonprofit Forum.

Ted Hart, spokesman for the attorney general, said state law requires the parties involved to provide notice of any potential sale 60 days before their intended closing date. The attorney general then would review the details of the sale and would have to give its approval.

On Thursday, the attorney general’s office filed a “notice of interested party” with the U.S. Bankruptcy Court reiterating its role in the process.

The role includes determining whether the nonprofit health-care entity will receive full and fair market value for its charitable or social welfare assets ... that the charitable assets are being sold for fair value ... and that the sale is in the best interest of the charity and the community, Hart said.

UNION SUPPORT

Union leaders are on board Ardent’s bandwagon.

“We believe the sale to Ardent is in the best interests of Forum employees and the community at large,” said Eric Williams, president of Youngstown General Duty Nurses Association of the Ohio Nurses Association, which represents nurses at Northside.

But, he said, this is between Forum, its creditors and the court to decide. The union is a spectator at this point.

Similarly, the Service Employees International Union, District 1199, favors the sale of Forum Health to Ardent. SEIU represents service workers at Forum.

“We feel this is the best path forward for sustaining jobs and health-care options for the Mahoning Valley. Employees have made millions in concessions to preserve Forum Health and it is time for the consent parties to share in that sacrifice. We ask that the court and the creditors consent to this sale,” said Anthony A. Caldwell, SEIU spokesman.

Gov. Ted Strickland said the agreement is an important step forward because, if approved, it will assure that Ohioans continue to receive consistent, quality health care and that hundreds will be able to keep their jobs.

“I am pleased because this will result in additional investment in the region, as well. My hope is that this agreement will ultimately be approved by the bankruptcy court, giving tri-county residents the health and financial stability they deserve.”