New buyer for Forum still possible

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The board's focus is on managing Forum out if its financial problems and looking for another buyer.

By WILLIAM K. ALCORN

VINDICATOR STAFF WRITER

YOUNGSTOWN — Forum Health officials say Community Health System's surprise decision to end negotiations to buy Forum does not preclude finding another buyer.

"We will have the opportunity to pursue other partnerships or sale options that could provide our hospitals with new resources and expertise. This is a disappointment, but certainly not a dead end," Dr. Keith Ghezzi said Wednesday in a memo to the Forum Health Community.

Likewise, Walter Pishkur, a Forum board of trustees member, said that while CHS emerged at the top of a short list of potential buyers, CHS is not the only hospital system out there. He would not comment on whether hospitals from Youngstown, Cleveland, Akron or Pittsburgh were among those interested in buying Forum.

Although closing the facility is one of three basic options, Pishkur said the board's focus is on the other two simultaneously: "Buckling up and managing our way out of our financial problems, or looking for another buyer."

Filing for bankruptcy protection remains an option, but it is not an end result, Pishkur said.

"It is just a tool to use if you can't pay your bills. The hospital would continue to operate during bankruptcy," he said.

Not saying why

In the meantime, the people who know why CHS terminated negotiations with Forum are not talking, leaving the community and other interested parties to speculate as to the reason.

CHS spokeswoman Rosemary Plorin said Thursday that the company does not discuss acquisition strategies. Neither will it talk about the reasons for withdrawing its nonbinding letter of intent to negotiate to buy the financially troubled Forum Health.

Further, she said even though the letter of intent was withdrawn, both Forum and CHS continue to be bound by a confidentiality clause contained in the agreement.

In his memo, Dr. Ghezzi urged people to "resist the temptation to speculate or assign blame" for CHS' withdrawal.

In addition to pursuing other partnerships or sale options, Dr. Ghezzi said the Forum board will also continue to strengthen the system's ability to operate independently.

"Together we can make the necessary changes we need to operate our hospitals with the efficiency, productivity and quality of patient care that will enable us to achieve a successful turnaround," Dr. Ghezzi said.

Dr. Ghezzi said that Forum's August financial numbers are "looking better," and that "remarkable progress has been make in improving the system's operating performance."

Forum leaders projected at the beginning of the year that the system would lose $60 million. By midyear, officials said the system was operating on a break-even basis.

Phillip Dennison, Forum board vice president, said the trustees will discuss what happens next at Tuesday's board meeting.

"We had just begun discussions with CHS. I can't talk about what happens next, except to say we'll discuss all options," Dennison said.

"As board members, we have a tremendous responsibility to preserve the health care provided to the community by Forum. We have no intention of closing. But it's a complicated process, and we're going to do it right. We didn't get here in a day, and we won't get out in a day," Pishkur said.

Speculation

Industry analyst Sandy Steever said CHS may have found something it didn't like during the "due diligence" process, such as more debt than expected or union opposition to the sale.

Steever, editor of a Norfolk, Conn.-based industry publication, Health Care M&A (mergers and acquisitions), said buying Forum does not fit CHS' model. He said CHS usually buys smaller hospitals than Forum, located in rural areas where there is no competition.

During a telephone press conference Wednesday, David Regan, president of Service Employees International Union District 1199, which represents about 1,400 of Forum's 5,000 employees, said it would not be fruitful to speculate as to why CHS rescinded its letter of intent.

Coalition needed

But, he said, because the stakes in the Forum situation are enormously high for the Mahoning Valley, SEIU "feels more strongly than ever" that there needs to be a coalition of community and business leaders, patients, unions and other stakeholders working together to solve the problem, rather than working independently.

When the community is left to speculate" about what is happening, no one's interest is served, Regan said.

Everybody recognized the conversation between CHS and Forum Health was important, but the vast majority of Mahoning Valley residents do not know why it broke down, he said.

Regan thinks the tone of Forum Flash, the hospital system's newsletter, has been consistently argumentative with regard to unions.

"I would ask that Forum Health view us as an asset rather than an adversary. Our goals are quality health care for the community and the maximum number of good jobs that Forum can provide," Regan said.

alcorn@vindy.com

Thursday, September 21, 2006