A bankruptcy judge has given struggling Jackson Hospital in Montgomery, Ala., two options: Provide a restructuring plan to reach financial recovery over the next five years or present a closure plan by the end of 2025, the Montgomery Advertiser reported Nov. 6.
“The bankruptcy judge told us in the last meeting that he expected by the end of December to either see a restructuring plan that’s believable and sustainable, or a closure plan,” Charles Evans, one of the new members of the hospital’s board of trustees, told the publication.
The hospital is facing a $106 million funding gap and needs around $293 million to stabilize its operations over the next five years. Mr. Evans told the Advertiser that only around $187 million of the required funds have been secured through sources such as grants, loans and Medicaid programs.
Rick Jackson is CEO of Jackson Healthcare, which is under the Jackson Investment Group, a company that provided Jackson Hospital its initial debtor-in-possession financing. Mr. Evans told the publication that Mr. Jackson said the hospital is at its “limit in terms of our continuing of additional funding” and needs the community to step up as much as it can to help.
The 344-bed hospital has also faced infrastructure challenges, including a broken HVAC system that has forced unit closures and limited capacity to around 225 licensed beds. Staffing shortages and a loss of around 50 providers has also strained its operations.
Jackson Hospital sought Chapter 11 protection in early February. On Oct. 7, the Montgomery City Council voted unanimously to approve a nonbinding resolution for the hospital, which did not include funding details.
On Oct. 14, a federal bankruptcy judge approved an emergency loan for Jackson Hospital, extending its debtor-in-possession loan from $22 million to $35 million, with a goal to keep the facility operational through Dec. 25.
In late October, Montgomery Mayor Steven Reed called for amendments to the proposed funding resolution, claiming the financial responsibility for the hospital lies with counties under Alabama law.
However, following those discussions, the City Council approved an amended resolution that removes the original 60/40 city-county funding match and authorizes the city to contribute up to $15 million, contingent upon Montgomery County, the state of Alabama and other governmental partners agreeing to provide equitable portions toward the overall plan, according to an Oct. 21 city news release shared with Becker’s.
A spokesperson for Jackson Hospital did not have a comment for Becker’s at this time.
