Potential bidder at odds with unions, US

Labor strife, lawsuit targeting CHS raise concerns in Valley




As the deadline approaches to submit bids for the bankrupt Forum Health, a potential second bidder has yet to publicly announce whether it intends to make an offer.

Bids for Forum, which filed for bankruptcy in March 2009, must be submitted to the court by Tuesday, and an auction is scheduled for Thursday. The court hearing on the sale takes place Aug. 10.

Community Health Systems — a Fortune 500 company that reported $12.1 billion in revenue last year — emerged earlier this month as a potential buyer for the health system, which includes Northside Medical Center in Youngstown, Trumbull Memorial Hospital in Warren and Hillside Rehabilitation Hospital in Howland.

The company, which has 120 affiliated hospitals nationwide, has spoken in recent weeks with union leaders and elected representatives about a possible offer, but, as of Friday, had not submitted a bid to the U.S. Bankruptcy Court.

Union officials have expressed concern about Community Health, however, citing recent labor disputes at several of its hospitals and an unresolved civil suit against the company for false Medicaid claims.

“They have had some pretty significant issues with labor and with the federal government,” said Eric Williams, president of Youngstown General Duty Nurses Association/Ohio Nurses Association, which represents nurses at Northside. “We are not getting any answers.”

The unions have been approached by labor organizations from Community Health-affiliated hospitals that have had problems with the company, Williams said.

“We are very concerned,” he said.

Community Health has been involved in a yearlong labor dispute with nurses at the Wyoming Valley Health Care System in Wilkes-Barre, Pa., which the company acquired in 2009.

The union accused the company of not bargaining in good faith and making unilateral changes in its labor contract, including failing to give nurses’ a scheduled 3-percent raise in January.

Nurse and union leader Fran Prusinski said the company has also instituted a new billing policy at the hospital that puts nurses in the middle of the payment process.

Community Health instituted a policy last year whereby patients are coded with red and green tabs, Prusinski said. Red tabs indicate patients who have not paid their co-pay, and nurses are instructed to take these patients to the hospital’s financial office before they can be discharged, she said.

“There is a total lack of respect for the workers,” she said. “And what it is really coming down to is respect for the community.”

In Spokane, Wash., health-care workers at Deaconess Medical Center and Valley Hospital and Medical Center threatened last week to strike against Community Health’s labor practices.

The National Board of Labor Relations has sided with the workers there, and has filed suit alleging that Community Health violated labor laws.

Forum union officials said they have questioned Community Health representatives about their labor problems.

“We have gotten no response,” Williams said.

It is the hospitals’ policy not to comment on matters regarding the collective bargaining process, said Community Health spokeswoman Tomi Galin.

The Forum unions also are concerned about the U.S. Department of Justice’s ongoing suit against Community Health, Williams said.

The suit charges that three Community Health hospitals in New Mexico participated in a scheme to submit false claims for federal Medicaid reimbursements.

The suit, filed in New Mexico after an investigation by DOJ and the U.S. Department of Health and Human Services, alleges that the hospitals made donations to New Mexico counties that were then used to obtain triple the amount in federal Medicaid payments.

The funding, including the donations, was then returned to the hospitals in violation of the Medicaid Act, according to the allegations.

The local union had its fourth meeting with Community Health on Wednesday, Williams said, and no further talks have been scheduled. Williams said it remains unclear whether Community Health will bid on Forum and what that proposal would entail.

As it stands, Ardent Health Services, a private health-care provider also based in Tennessee, is the only known bidder for Forum.

Ardent has agreed to purchase the health system for $69.8 million. The deal has garnered the support of state and local officials, including Ohio Gov. Ted Strickland, as well as the unions representing Forums’ nurses and employees.

Ohio Attorney General Richard Cordray, who must approve plans for any sale of more than 20 percent of the assets of any nonprofit company, said he will announce the results of his review of the Ardent proposal at a press conference Monday in Youngstown. He said that, as of Friday, his office had not received any proposal from Community Health.

If Community Health does decide to make a bid, it would be the second time the company flirted with the idea of buying the embattled local health system.

Community Health signed a nonbinding letter of intent to purchase Forum’s assets for an undisclosed price in 2006 but backed out of the deal a month later without explanation.

The company would not disclose why it gave up on a Forum purchase four years ago, nor confirm that it is looking into buying Forum Health again.

Unlike Ardent, which operates acute-care facilities in the urban markets of Albuquerque, N.M., and Tulsa, Okla., Community Health’s acquisition strategy primarily targets health systems in “growing, non-urban markets where there is little or no competition,” according to the company’s 2009 annual report.

Those markets generally obtain higher operating margins than urban hospitals because of lower cost structures, limited competition, fewer patients with complex medical problems and higher Medicare reimbursements, the report states.

When Community Health initially expressed interest in a Forum purchase in 2006, some local officials, including Youngstown Mayor Jay Williams, questioned how the Forum system, particularly the urban Northside Medical Center, fit into the company’s business plans.

Since 2006, Community Health has expanded into larger markets where there is competition among multiple health-care providers, Galin said, citing Fort Wayne, Ind., and Birmingham. Ala.

Williams said Community Health representatives have assured him that the company is well-capitalized and has experience in markets similar to the Mahoning Valley’s .

“While my concerns remain the same, they have said they are very much committed to the ongoing operations at Northside,” Williams said. “We will see what happens.”

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