MAHONING COUNTY Forum deals with losses
Officials are looking for ways to cut costs and raise revenue.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Forum Health's struggle with striking nurses comes as it tries to dig out of three straight years of operating losses at its hospitals.
Forum's Mahoning County facilities have been losing millions of dollars a year, but earnings on investments have covered those losses in at least one of those three years.
Henry Seybold, Forum chief financial officer, said Forum has intensified its drive to raise revenues and hold down expenses to turn the losses into gains.
"Hospitals need to make money from operations in order to survive," he said.
He wouldn't say when Forum officials expect to break even on the Mahoning County facilities, which include Northside Medical Center, Tod Children's Hospital and Beeghly Medical Park.
The numbers: "You don't take a $9,261,000 loss and turn it around in one day," he said.
That was the operational loss for the Mahoning County hospital-related facilities in 1999, the latest year for which Forum has filed a required Internal Revenue Service financial form.
Overall, those facilities made $5.5 million in 1999 when investments are factored in.
Seybold said Forum can't rely on its investments to balance its books because of the uncertainty. The booming stock market in the late 1990s made it easy to post gains on investments, but times are more difficult now, he said.
In 1998, the Mahoning County facilities had an operational loss of $20.3 million and an overall loss of $8.7 million.
Seybold said they also had an operational loss last year but declined to say how much. He also declined to make an estimate for this year.
Staying open: Despite the operational losses, Seybold said Forum is not in danger of closing.
"We believe Forum Health will be here far into the future to serve the needs of the community," he said.
He noted that 40 percent of hospitals nationwide posted operational losses in 1999.
There isn't one major thing that will eliminate Forum's losses, so hospital officials are striving to raise revenues and watch expenses in various ways, Seybold said.
Still, the hospitals think they have offered the nurses union a contract with fair compensation, he said. Forum offered nurses 3 percent raises annually over three years.
Nurses, however, say they are upset at Forum's use of mandatory overtime.
Seybold said Forum isn't planning any significant staff cuts this year to reduce its operational losses. It laid off people in 1999 and 2000, but overall it still has about 5,000 employees because of hirings in other areas, he said.
In watching expenses, Forum is working with suppliers to get the best deals possible, he said. Expenses are tough for hospitals to control, however, because of the increasing cost of technology and drugs, he said.
To increase revenue, officials are negotiating the best rates in new contracts with managed-care companies and making sure Forum is receiving proper reimbursement under current contracts.
These aren't new activities, but officials are pursuing them with more intensity, Seybold said.
Income: Revenues also are being helped because the federal government changed regulations last year to provide slightly higher reimbursements for Medicare expenses, he said. New federal legislation in 1997 was a large factor in creating the operating losses because it drastically reduced payments, he said.
Trumbull Memorial Hospital, which also is part of Forum, has reported similar results. It had operating losses of $4.1 million in 1999 and $2.5 million in 1998. With its investment income, it had gains of $1.8 million last year and $300,000 in 1998.