Jackson Hospital and Clinic is not moving forward into a partnership with an investment group, hospital leadership said in a statement to Alabama Daily News on Monday.
The not-for-profit hospital in Montgomery has had significant recent financial struggles, including defaulting last month on loan repayments.
“(The hospital) and HumanityCorp mutually and amicably agreed to no longer pursue an affiliation between the two organizations, except for HumanityCorp affiliate Capta Health Partners, LLC, which continues to provide revenue cycle management services for the hospital,” the statement from retired Brig. Gen. Edward Crowell, chairman of the hospital’s board of directors, said.
Hospital leadership in June voted to affiliate with HumanityCorp, which describes itself as a health care-focused public benefit entity that creates returns for investors.
Now, the board has hired Allen Wilen with Eisner Advisory Group in Birmingham as its chief restructuring officer, and Ronald Dreskin, also of Eisner Advisory Group’s Health Care Services practice. The two will lead a “team of professionals who are assisting the hospital through the health care restructuring process to help accelerate a turnaround.”
“The addition of Wilen and Dreskin to the leadership team allows other senior leaders to focus on the hospital’s day-to-day management while they dedicate themselves to the restructuring,” Crowell said.
“For the past month, meetings have taken place with bondholders, insurers, government officials, suppliers, and other stakeholders to rally support for the hospital. Additionally, Allen Wilen took immediate steps to stabilize the hospital’s cash position, including arranging for additional financing through the existing lenders and bondholders. Negotiations are underway with bondholders to cure the bond interest payment default. The cash infusion will provide the liquidity and runway needed for Wilen, Dreskin, and the senior leadership team to evaluate operations, devise a strategic plan for recovery and growth and position the hospital for long-term success.”
There have been no employment cuts at the hospital, the statement said.
In September, al.com reported Jackson’s bond rating had been lowered to a “D” after it defaulted on bond interest payments.
The bondholder requested full payment after the hospital failed to make interest payments. The hospital’s liquidity, according to S&P, “is very thin and insufficient to meet the bondholders’ demand for full payment.”
The hospital cited high labor costs and inflation for missing the bond payment, Bloomberg reported.
With 344 beds, Jackson offers cardiac, cancer, neurosciences, orthopedics, and women’s and children’s care. It also has a 24-hour emergency department.
Next steps for Jackson include “evaluating operations to identify performance improvement opportunities,” improving clinical utilization across the hospital, recruiting professional and clinical staff and increasing engagement with “key constituents,” including government and philanthropic support.
“Jackson Hospital remains open and will continue to provide access to superior, patient-centered, cost-effective care in a safe, compassionate environment for all individuals in Montgomery and the Alabama River Region,” the statement said.
Jackson’s financial uncertainty comes not long after either the closure or shuttering of services of several Alabama hospitals, particularly those in the state’s rural areas.
Last month, the Thomasville Regional Medical Center in Clarke County closed “until further notice,” citing financial hardships. Earlier this year, Bullock County Hospital and Grove Hill Memorial Hospital shuttered their inpatient services, and within the span of one month late last year, three hospitals discontinued their own inpatient services.
As of July, there were at least 34 Alabama hospitals with financial losses on services, 28 at risk of closing, and 24 at immediate risk of closing, per the latest report from the Center for Healthcare Quality and Payment Reform.
The problem, some Medicaid expansion advocates say, is the large swath of Alabamians without health insurance, patients whose inability to pay hurts hospitals financially, with 17.5% of the state’s population uninsured as of 2019, per the Alabama Department of Public Health. The national uninsured rate is 13.6%.
Others, like Sen. Larry Stutts, R-Tuscumbia, point instead to the low reimbursement rates for Medicaid patients as the problem, and has argued that adjusting the state’s Medicaid fee schedule – the formula that determines how much health care providers are reimbursed for Medicaid patients – would help prevent Alabama hospitals from shuttering.
Alabama Daily News’ Alexander Willis contributed to this report.