Mayor, lawmakers react to bankruptcy filing of Montgomery’s Jackson Hospital

MONTGOMERY, Ala. (WSFA) - Montgomery Mayor Steven Reed and state lawmakers reacted Tuesday afternoon to news that Jackson Hospital and Clinic, which he called “a cornerstone of our community’s healthcare system,” filed for Chapter 11 bankruptcy protection.

Reed said his office “will work diligently to support” the hospital, releasing a statement that reads:

The financially-troubled hospital filed paperwork on Monday, court filings show. On Tuesday, U.S. Bankruptcy Judge Christopher L. Hawkins granted an emergency motion for an expedited hearing, which is set for 10 a.m. Wednesday at the U.S. Bankruptcy Court in Montgomery.

Court documents indicate Jackson listed assets and liabilities of between $100 million and $500 million. In a list of 30 creditors who have unsecured claims, Jackson Hospital owes more than $28 million to CAPTA HEALTH PARTNERS, LLC, based in Chicago.

Jackson Hospital officials have since confirmed the hospital and its clinics will remain open and operating as usual and says it’s focused on the care and safety of its patients.

Jackson officials said it experienced “significant financial pressures” in recent years, and noted that “increased labor costs, stagnant reimbursement rates, a challenging payor mix, and fallout from COVID-19″ were among the factors. The hospital also specifically pointed out Alabama’s decision not expanding Medicaid as a major reason for financial losses. The non-profit hospital said it loses significant amounts of money caring for the uninsured, and that in 2023 alone, “gross charges related to the care of uninsured patients exceeded $45 million.”

Jackson defaulted on a $60 million in bond payments in September, causing a hit to its credit rating. In November, the hospital made changes in its leadership, announcing the departure of Chief Operating Officer Joe B. Riley and Chief Operating Officer Michael James.

Prior to the bond going into default, the not-for-profit hospital went into an agreement with Humanity Corp. but later decided to amicably part ways.

Wilen said for months before the bankruptcy filing, the hospital held meetings with various parties, including its bondholders, as well as city and county officials in Montgomery, in an effort to find ways to restore financial stability.

“Bondholders offered to provide debtor-in-possession (DIP) financing but required a fully collateralized $20.5 million loan guarantee from the City of Montgomery,” Wilen said.

Doctors and nurses from Jackson Hospital, worried about their jobs and their patients, filled the Montgomery City Council chambers last Friday, anxiously waiting to hear whether the city would lend its creditworthiness to help the hospital stay afloat.

“We continued to work with the City, providing all requested information,” Wilen said in an effort to secure the loan guarantee. The Council still had questions they want answered and were concerned about possible consequences for the city. Instead of voting to approve the resolution, they amended it to say the city could “negotiate” with Jackson on a possible solution and planned another meeting for today.

Wilen said the information requested by several council members was “previously provided to the City’s attorney.”

“After the January 31st City Council meeting, the bondholders expressed concern that we could not effectuate the loan guarantee, and therefore, they could not extend the financing needed to fund the Hospital’s operations,” Wilen said. “We had no choice but to consider alternative paths to continue the Hospital’s uninterrupted operation, leading to today’s announcement.”

Jackson Hospital has a long history in the Montgomery area, with its origins dating back to the 1890s when it was called Watkins Infirmary. It took on its current name in 1946 when it opened with 37 patient beds and five attending physicians. Today, is has 344 beds and provides emergency services as well as cardiac, cancer, neurosciences, orthopedics, and women’s and children’s care.

BIPARTISAN GROUP OF ALABAMA LAWMAKERS

A group of Alabama lawmakers, both Republican and Democrat, released a statement Tuesday afternoon saying they’re working to help Jackson Hospital.

The lawmakers include State Representatives Penni McClammy, Phillip Ensler, Kelvin Lawrence, Kenyatte Hassell, Chris Sells, Reed Ingram, Anthony Daniels and State Senators Kirk Hatcher, Will Barfoot and Bobby Singleton.

The statement reads:

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