Ex-Forum CEO fears for system’s future

By WILLIAM K. ALCORN

alcorn@vindy.com

YOUNGSTOWN

Forum Health’s former chief executive says the organization’s major secured lenders want a quick recovery of their money via a sale of the bankrupt health-care system.

Walter “Buzz” Pishkur, the company’s immediate past president and chief executive officer, does not believe, however, that selling Forum is in the best interests of the health-care system, its employees or the community.

He fears for the company he helmed for a year.

“I’m afraid I’m going to wake up one day and be told they are pulling the plug,” Pishkur said.

Pishkur maintains that the lenders prefer the sale of Forum over a successful reorganization, which would bring a return to the creditors’ investment over many years rather than right away.

Forum owes its secured lenders about $139 million, $55 million of which is in a debt-service fund, which Pishkur says is enough money to guarantee payments of principal and interest to lenders for three years.

But the lenders, through their spokesman, Lance Ignon of MBIA, a firm that insures the lenders, strongly disagrees with Pishkur’s assessment of the situation.

In a written statement, Ignon said: “Unfortunately, the lenders were never provided with a reorganization plan that ensured long-term viability for the hospitals and met the requirements for confirmation under the Bankruptcy Code. The lenders’ offers to work cooperatively to develop such a plan were rejected.”

Pishkur said he presented a reorganization/business plan that was validated by Forum’s chief restructuring officer and Lisa Medovich, Forum financial officer.

Anyone involved in the process who says they don’t know what the reorganization plan was is not being honest. The job of the chief restructuring officer was to be a liaison between Forum and its creditors, Pishkur said.

“The more successful we were, the more it confounded the lenders. I’m concerned that too much money is being spent on outside consultants when there was a viable plan in place that was working,” he said during a wide-ranging interview this week.

Remaining in bankruptcy costs a lot of money, he said.

Pishkur said that during the bankruptcy period, the one-year anniversary of which is this month, between $1.5 million and $2 million a month has been spent on consultants and attorneys and other experts. A better use of the money would have been to spend it on employees and capital investments, he said.

Pishkur said his reorganization plan has all three of Forum’s hospitals — Northside Medical Center, Youngstown; Trumbull Memorial Hospital, Warren; and Hillside Rehabilitation Hospital, Howland — profitable in 2010, 2011 and 2012 without an increase in admissions or growth in the system.

“When I left, it looked like we were turning the corner,” he said.

According to a year-end financial document filed with the bankruptcy court by Forum, it had $19,478,566 in gross profit since March 16, 2009, when it filed for bankruptcy, and $19,479,581 in total expenses, for a net operating loss of $15.

Ignon said the secured lenders have been “supportive of a positive solution for Forum since long before it filed for Chapter 11 and have continued to support Forum during its restructuring.”

Further, the lenders believe that under new leadership, the health-care system is now working to produce a positive outcome for all its constituents, Ignon said.

The last public statement from Forum Health said negotiations were under way with a potential buyer. The potential buyer is widely believed to be Ardent Health Services, a for-profit company with its headquarters in Nashville, Tenn.

Diane Sauer, a member of Forum’s board of trustees, said the board’s policy is to not comment.

Calls to Youngstown Mayor Jay Williams, whose city could lose all or part of the revenue generated by 1,400 jobs if Northside is closed or reduced in size, were not returned.

“Secured lenders are positioning themselves to get 100 percent return on the dollar,” Pishkur said.

At the same time, employees are being asked for more concessions, local unsecured creditors may not be paid, and the community could lose its choice in health care, he said.

“It’s disappointing to me. We’re approaching April, and Forum is still in bankruptcy. Forum is paying millions in consultant fees ... and I don’t see a lot of admission growth,” he said.

Forum can’t cut costs and get out of bankruptcy. It also must expand, Pishkur said.

Pishkur said he does not know if there is a reorganization plan besides his and also doesn’t know what, if anything, is being spent on capital projects.

If Forum Health continues to operate without capital investment, without admissions growth and to burn up millions of dollars in consultant and attorney fees, Forum will have a diminished sale value, Pishkur said.

If that occurs, and there is only one buyer, its position is strengthened and Forum’s weakened, and there is a potential for more concessions from employees, job losses and use of foundation funds to pay the lenders, he said.

On the other hand, if the hospital system does invest in itself and build admissions, then if the board of trustees does decide selling is the best option, it will have more value, Pishkur said.

But, he said, “I fear Forum Health may be getting into a position where it will not have alternatives.”