Troubled Alabama hospital remains ‘open’ after $60 million default: What’s next?

Jackson Hospital & Clinic in Montgomery has agreed to no longer continue its relationship with a national investment firm as hospital leadership continues to seek a solution to recent financial difficulties.

In June, the hospital’s board of trustees voted unanimously to affiliate with Virginia-based venture capital firm HumanityCorp to “remain a nonprofit organization and remain true to its mission and commitment to improving the health of all members of the community.” by providing world-class, patient-centered and cost-effective care in a safe, compassionate environment,” said a previous press release.

Following this week’s “mutual agreement” to terminate the partnership, Allen Wilen, chief restructuring officer, and Ronald Dreskin, partner in charge of Eisner Advisory Group’s healthcare services practice, will work with a team of professionals to “accelerate the hospital’s turnaround.” . says the Monday announcement.

“Meetings were held last month with bondholders, insurers, government officials, suppliers and other stakeholders to drum up support for the hospital,” the release said.

“In addition, Allen Wilen has taken immediate steps to stabilize the hospital’s liquidity position, including providing additional financing from existing lenders and bondholders…The liquidity injection will provide Wilen, Dreskin and the leadership team with the liquidity and jump-start necessary to evaluate operations , design a strategic plan for recovery and growth and position the hospital for long-term success.”

Wilen was named chief restructuring officer last month after the hospital defaulted on a bond payment, AL.com’s William Thornton previously reported.

The hospital defaulted on 2015 bonds from the Medical Clinic Board of the City of Montgomery worth about $60 million, representing 86% of the hospital’s long-term debt, S&P said in a statement explained why it lowered the hospital’s rating to “D.” from “CC.”

The bondholder demanded full payment after the hospital failed to make interest payments. Montgomery Hospital’s liquidity is “very thin and insufficient to meet bondholders’ demand for full payment,” according to S&P.

“The ‘D’ rating reflects that Jackson missed its final interest payment to bondholders on the 2015 Series bonds, which was due on September 3, 2024,” S&P Global Ratings credit analyst Marc Arcas said in a statement to Thornton. “The ‘D’ rating, by definition, indicates that the obligation is in default or fails to deliver on an implied promise. This rating category is used when payments on an obligation are not made on the due date.”

Jackson previously cited inflation and high labor costs as reasons for his financial situation in a September Bloomberg article.

In this week’s press release, the hospital said it would take the following steps to improve its reputation:

• Evaluate operations to identify opportunities to improve performance.

• Focus efforts on improving clinical utilization across the hospital and improving internal processes.

• Filling provider gaps to meet market demand and recruiting professional and clinical staff, thereby increasing revenue.

• Build stronger engagement from all key stakeholders, including community, philanthropy, government and payer support.

• Meeting future care needs and preparedness to meet the health care needs of individuals in Montgomery and the Alabama River Region.

The press release continued that there have been no changes to employment at the hospital due to recent events.

“Jackson Hospital remains open and will continue to provide all people in Montgomery and the Alabama River Region access to world-class, patient-centered, cost-effective care in a safe, compassionate environment,” this week’s statement said.