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Bankruptcy, sale costs for Forum Health near $30M



Published: Sun, September 25, 2011 @ 12:01 a.m.
FORUM HEALTH | Compensation total

U.S. Bankruptcy Judge Kay Woods is set to rule Oct. 25 on the appropriateness of some $29.5 million in compensation requested by major professional firms that worked on the Forum Health bankruptcy and sale. Not all professional payouts are listed nor are Forum’s internal costs associated with the bankruptcy. Compensation consists of professional fees and expenses tied to the case.

McDonald Hopkins LLC, attorneys for Forum Health, fees, $7,419,317; expenses, $184,104, from March 16, 2009 to Aug. 17, 2011.

Houlihan Lokey Howard & Sukin, investment banker that sought bidders for Forum Health, fees, $7,108,606 which includes $2,250,000 in monthly fees and $4,858,606 in transaction fees; expenses, $186,169, from July 13, 2009, to Oct. 12, 2010.

Huron Consulting Group, financial advisers to Forum Health, fees, $6,342,802; expenses, $343,304, from March 16, 2009, to Aug. 17, 2011.

Ardent Health Services, stalking horse for the sale of Forum Health, a total of $2,354,778 in fees and expenses. Ardent put in the initial bid for Forum.

Grant Thornton LLP, financial adviser to the Official Committee of Unsecured Creditors of Forum Health, fees, $2,083,656; expenses, $39,214, from April 1, 2009, to Aug. 16, 2011.

Alston & Bird LLP, counsel for the Official Committee of Unsecured Creditors of Forum Health, fees, $1,814,761; expenses, $72,084, from March 25, 2009, to Jan. 31, 2011.

Ernst & Young LLP, tax consultants to Forum Health, fees, $671,243; expenses, $34,707, from Aug. 21, 2009, to Aug. 17, 2011.

Nadler, Nadler & Burdman, attorney for Forum Health, fees, $442,847; expenses, $18,395, from March 16, 2009 to Aug. 17, 2011.

Thompson Hine LLP, special counsel to Forum Health, fees, $277,535; expenses, $5,785 from April 26, 2010, to Sept. 16, 2011.

Crowe Horwath LLP, consultants to Forum Health, fees, $104,897; expenses, $873; total, $105,770; for Nov. 1, 2010 to Aug. 17, 2011.

TOTAL FEES, EXPENSES: $29,505,077

Source: U.S. Bankruptcy Court documents

By WIlliam K. Alcorn

alcorn@vindy.com

YOUNGSTOWN

The first-year accomplishments of Community Health Services have ranged from fresh investments in facilities to job eliminations.

Now comes the revelation of the massive costs associated with Forum Health’s bankruptcy and sale.

According to court documents, the cost of Forum’s bankruptcy for professional fees alone is in excess of $29.5 million, all of which must be paid by Forum if approved by U.S. Bankruptcy Judge Kay Woods.

The professional fees did not end when Community Health Services purchased Forum Health for $120 million on Oct. 1, 2010, changing Forum’s name to ValleyCare Health System of Ohio. Changed, too, was its status, from nonprofit to for profit.

The bankruptcy fees continued to mount for 10 more months until the case was wrapped up in August.

The outlay of cash during Forum’s prolonged bankruptcy particularly galls Walter “Buzz” Pishkur, former Forum chief executive officer and president.

Pishkur said one of his priorities when he took over as CEO was to stop the bleeding of millions of dollars in professional fees for restructuring efforts before the hospital system filed for bankruptcy on March 16, 2009.

“The bankruptcy process was taking operating funds out of the hospital and money out of the community, and we were assured we would be out of bankruptcy by the end of 2009,” Pishkur said.

The top three beneficiaries in professional fees from the bankruptcy process are McDonald Hopkins LLC, lead attorneys for Forum Health, which is seeking $7.6 million in fees and expenses; Houlihan Lokey Howard & Sukin, investment banker that sought bidders for Forum Health, $7.2 million in fees and expenses; and Huron Consulting Group, financial advisers to Forum Health, $6.6 million in fees and expenses.

“Getting out of bankruptcy quickly was one of the key components in the actions I took, and when it didn’t happened I was very angry,” Pishkur said. “There was never a doubt in my mind that the hospital system would remain viable. We just needed to get out of the grips of bankruptcy and being billed by outsiders.

“With all the money leaving the community, we were not able to buy equipment and pay employees adequately. We lost the ability of the hospital [system] to function the way everybody wanted it to,” he said.

Atty. Shawn Riley of the McDonald Hopkins firm in Cleveland, lead attorneys for Forum Health, does not think the $7.6 million in professional fees sought by his firm was misspent.

During that nearly 28 months of the bankruptcy, Forum’s financial advisers, attorneys and management team took three hospitals through a very difficult time including a threat of closure by their bond holders, Riley said.

“We negotiated an operational turnaround, a successful sale, and with Forum’s unsecured creditors, that resulted in a significant amount of money remaining in the Western Reserve and Trumbull Memorial foundations that remains in the community,” he said.

Judge Woods ruled the foundations’ assets, made up of private donations, off limits to all creditors, but eventually awarded $1 million of their combined $12 million in assets as the foundations’ share to unsecured creditors.

From Riley’s perspective, the whole process was a “huge success. The hospitals remained open and continue to operate.”

Not all the money spent over the last year has gone out of the Mahoning Valley.

The ValleyCare properties in Mahoning and Trumbull counties remain Northside Medical Center in Youngstown, Trumbull Memorial Hospital in Warren and Hillside Rehabilitation Hospital in Howland,

In addition, ValleyCare has outpatient clinics and various other facilities in the two counties.

ValleyCare said it has invested more than $35 million on medical equipment upgrades such as the therapeutic hypothermia unit at TMH and new emergency department technology at Northside.

ValleyCare has also invested in much-needed facility upgrades to the hospital buildings, such as fire-alarm systems.

At Northside, a patient-care area is being renovated. Some $2 million went for basic equipment and supplies for nurses and physicians to do their work, said David Fikse, chief executive officer of Northside and of the entire former Forum Health system, in an interview last January.

When CHS purchased Forum Health, it pledged to spend at least $80 million over the next five years to upgrade ValleyCare hospital facilities, medical equipment, technology and services.

Other investments include medical-equipment upgrades to provide our clinicians with advanced tools they need to deliver high quality-care, such as IV pumps and diagnostic imaging equipment and an MRI upgrade at the Austintown and Elm Road facilities.


Comments

1Bearcat411(10 comments)posted 3 years, 3 months ago

This is just the tip of the waste of the last Forum Health Board Members allowed.Watching the hosptitals demise was a true eye opener.The sale of some of the most lucrative parts of Forum was unbelievable>>Beeghly being the blunder of all blunders . What were they thinking of >>>Fast cash for sure but now it's biting them where it hurts.As for CHS spending on upgrades come on .Take a look inside ! They did a bit of painting_brought in new beds--bedside furniture ....renting them I heard ..and new cardiac monitors IV equipment all which can be loaded on 2 semi's and brought back to wherever.This isn't what I call a restoration .just a simple makeover.People who work there now are facing cuts in hrs worked .CHS promised to bring in docs who would make Northside the hospital it used to be. It's been over a year+ now and maybe 3 have gotten contracts .The typical corperate promises broken but we as a community have to settle on whatever.

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2Stan(9923 comments)posted 3 years, 3 months ago

THE FEEDING FRENZY AT THE PLUNDERING OF THE NORTHSIDE MEDICAL FACILITY !

This is pathetic ! Where are our lawmakers who are supposed to be protecting us ? A community resource has been raped ! Health care costs at Northside have went through the roof because of this .

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3magnolia(27 comments)posted 3 years, 3 months ago

What a con! Everyone has been chumped! They have been punishing the employees all along throwing people out like trash. They have not invested as much as they claim. Painting some walls and renting equipment at Northside is NOTHING! They have failed to bring in the doctors as promised, they have failed to find a location in "Southern Mahoning County" to increase the business at Northside. The sprinker system upgrade is old news. The sprinkler upgrade was started prior to the bankruptcy and just needs to be finished. It is nothing new. It has been one big lie. The bankers, consultants, attorneys and Board are the ones who will make out like bandits. The employees (the few who are left) and the community are the ones who lose. So much sacrifice given by the employees, wage freezes, higher insurance premiums, give backs on holiday pay and vacation time, give backs on sick time and for what, a pink slip? Thanks CHS and all the other greedy folks involved in this debacle. EPIC FAIL!!

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4walter_sobchak(1982 comments)posted 3 years, 3 months ago

As always, only the lawyers make money in a bankruptcy case. Once this os disposed of, it will really get interesting. With the amount of indigent care that must be provided at Northside, there is no way CHS keeps it open and further expose itself to the losses. CHS is not bringing in any new doctors to staff the facility. They had the chance to purchase Dr. Miladore's practice and passed! And, let's face it...Northside is a dump and you can't polish a turd! Hopefully CHS wil implode Northside and build a new facility on Western Reserve Rd.

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