Rumored for months, privately owned Nashville, Tenn. hospital company Ardent Health Services has won the bid for Forum Health, agreeing to pay $69.8 million to buy the Youngstown, Ohio, health system out of bankruptcy court.
Ardent is buying Northside Medical Center, Trumbull Memorial Hospital, Hillside Rehabilitation Hospital, as well as Forum Health’s physician group, two diagnostic and imaging centers, and five laboratories.
Ardent has pledged to keep all three hospitals open, investing up to $70 million over five years to renovate, equip and upgrade the facilities, according to a Forum Health press release (pdf). Forum’s creditors had estimated the system was worth $76 million, according to WFMJ-TV.
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No word yet on Forum’s 3,500 employees. However, members of the Youngstown system’s three unions — the Service Employees International Union, the American Federation of State, County and Municipal Employees and the Ohio Nurses Association — have indicated support for the purchase, according to Forum.
It’s been a bumpy ride for Forum’s employees and creditors. Employees faced at least three layoff rounds while their employer reorganized in bankruptcy court. At one point, Northside Medical Center was slated for closure, then won a reprieve, thanks to a creditor agreement that cost CEO Warren “Buzz” Pishkur his job.
Late last year, three federal legislators appealed to President Obama for financial assistance for the bankrupt healthcare organization. And last month, with Northside again on the chopping block, labor leaders threatened to sue creditors who wanted millions of dollars of contract concessions to get the system out of bankruptcy, according to the Warren Tribune Chronicle.
Ohio Gov. Ted Strickland weighed in on the proposed sale on Thursday: “This agreement is an important step forward because, if approved, it will assure that Ohioans continue to receive consistent, quality healthcare and that hundreds will be able to keep their jobs,” Strickland said in a written statement. “I am pleased this will result in additional investment in the region as well.”
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Forum and Ardent outlined their plan in a Thursday filing in U.S. Bankruptcy Court in Youngstown. It may take Judge Kay Woods several months to review the purchase agreement, as well as any competing bids or objections to the agreement, Forum said. The Youngstown health system filed for federal bankruptcy protection in March 2009, citing a several-year struggle to cut costs, repay debt, sell assets and keep managers.
“After thorough evaluation of all options, the board concluded that the best possible outcome for Forum Health, our creditors and the community is a sale to Ardent, which is known for investing in quality care,” Phil Dennison, board chair, said in Forum’s release. “The proposal by Ardent truly offers Forum Health a more secure and stable future, and provides continued access to high-quality healthcare services for residents of the Mahoning Valley.”
David Vandewater, Ardent’s president and CEO, sees Forum’s potential.
“We believe in Forum Health and its future as a vibrant contributor to the region, as a provider of quality healthcare and as an important employer,” Vandewater said. “We appreciate the support we have received throughout the community, the state and within Forum. We hope the court will approve the sale and that we’ll have the opportunity to join this community and be a part of its next success story.”
Vandewater joined Ardent’s predecessor company, Behavioral Health Corp., in 2001. Prior to that, he was president and chief operating officer for HCA Inc., the former Columbia/HCA Healthcare Corp., which is the largest for-profit hospital company nationwide.
Ardent operates seven hospitals, a multi-specialty physician group, a 220,000-member health plan and a national medical laboratory. The company with $1.8 billion of annual revenue employs 7,745 people, according to its Web site.
Ardent is largely owned by Welsh, Carson, Anderson & Stowe, the New York private equity firm that manages a $20 billion portfolio of healthcare and information/business services investments. Welsh, Carson is the firm that invested in and then sold MemberHealth, the Solon, Ohio, pharmacy benefits manager.