Montgomery, Ala.-based Jackson Hospital and Clinic has sought Chapter 11 protection to allow the facility to implement financial restructuring and reorganize operations.
The 344-bed non-profit hospital has dealt with "significant financial pressures" over the last few years due factors like a challenging payer mix, COVID-19, stagnant reimbursement rates, and increased labor costs, according to a Feb. 4 news release shared with Becker's.
Jackson Hospital also faced significant financial losses due to the absence of Medicaid expansion in the state and the hospital's obligation to provide care for uninsured patients. It incurred more than $45 million in gross charges in 2023 for treating uninsured patients.
Prior to filing for Chapter 11, various stakeholders engaged with the hospital to explore different strategies to restore financial stability. While bondholders offered debtor-in-possession financing, they required a fully collateralized $20.5 million loan guarantee from the city of Montgomery.
Despite the hospital's work with city officials, the decision process was ultimately delayed and the bondholders expressed concerns around the loan guarantee. As a result, the hospital "had no choice but to consider alternative paths to continue the hospital's uninterrupted operations," Allen Wilen, chief restructuring officer for the hospital, said in the release.
"Jackson Hospital has received a commitment for DIP financing from third-party Jackson Investment Group to facilitate the bankruptcy process," the release said. "Following court approval, the DIP financing and cash generated from the hospital's ongoing operations are expected to support the debtors."