MONTGOMERY, Ala. — Employees and leadership of Jackson Hospital and Clinic rallied Thursday in the hopes of swaying city council members to vote today to guarantee a $20.5 million loan for the financially struggling facility.
Without the loan, the hospital could close, officials warned.
Last September, Jackson Hospital saw its bond rating lowered to a “D” after it had defaulted bond interest payments, resulting in the hospital’s CEO and COO stepping down from their positions. Kicking off the rally, Ron Dreskin, who was selected to serve as interim CEO, spoke to the hospital’s financial struggles in recent years.
“Like many hospitals in Alabama, Jackson has experienced significant financial pressures, increased costs, the pandemic, poor reimbursement rates, uninsured working poor,” Dreskin said, with dozens of hospital employees standing behind him in solidarity. “All of these factors have negatively affected our financial position, and several months ago, unfortunately forced us to default on the bonds that we had taken to make capital improvements around the hospital.”
The Montgomery City Council is scheduled to vote on a proposal Friday during a special-called meeting that would authorize Mayor Steven Reed to execute an agreement with the hospital for a debtor-in-possession financing loan, a type of loan for companies that have filed for bankruptcy. The proposal was introduced by Montgomery City Council member Glen Pruitt, who told Alabama Daily News that were the council to approve the loan, Jackson Hospital would then file for bankruptcy while financially restructuring itself.
“So we’re guaranteeing a bond, not (putting up) any money,” Pruitt told ADN during the rally. “Now, if it folds for some reason, we, the city, have to come up with that $20 million.”
Despite the risk, Pruitt said he was confident that with the loan, Jackson Hospital would be able to “turn the ship around,” and stressed the potential impact to not only Montgomery, but its surrounding communities should Jackson Hospital be forced to shut its doors.
“Without health care, there is no economic growth – who wants to come to a city where at Baptist (Hospital) you’ve got to sit in the parking lot like Mary and Joseph did, where there’s no room in the inn?” he said. “You can’t do that to families here. It’s time for us to help them. So goes Montgomery, so goes the River Region. If we don’t have a hospital, what are people in Prattville going to do? The city can’t wait on it.”
Jackson Hospital leadership had previously been negotiating with the Montgomery County Commission for a loan, though negotiations had fallen through, according to Allen Wilen, who was recently brought on as the hospital’s chief restructuring officer. Were the Montgomery City Council to vote down the proposal today, Wilen said that the hospital may shut down entirely.
Pruitt was unsure how today’s vote would come down, he told ADN, though he did know of at least one other member of the nine-member City Council who would vote in favor of the loan: Marche Johnson.
Representing Montgomery District 3, Johnson shared in Pruitt’s belief that Jackson Hospital’s closure would devastate Montgomery and its surrounding communities, and at the rally, encouraged state lawmakers to also play a role in helping make not just Jackson Hospital, but all Alabama hospitals financially stable going forward.
“A hospital is a place of life-saving care, but it’s also a business that provides jobs and supports the economy in every city in our state,” Johnson said. “And no business can survive when a large percentage of what they produce must be given away for free. Our state must take action to close the insurance coverage gap, we must come together as a community and call upon our state leaders to wake up and take action.”
Jackson Hospital employs about 2,500 people and has operated in Montgomery since 1946. With 344 beds, it is the 18th largest hospital in the state, and the second largest in Montgomery behind Baptist Medical Center South.
“We are not asking for a dollar of funds from the city of Montgomery, but we are asking them to guarantee the financing that we require to get us through the next period of time,” Dreskin said. “If we fail to get the guarantee, it’s going to be very difficult to get the cash we need to go forward.”