Jackson Hospital’s fate may depend on City of Montgomery’s support
The signs of several staff members who rallied outside Jackson Hospital & Clinic on Thursday morning imploring onlookers to “save their jobs” made two things clear: Jackson Hospital’s situation may be more dire than it previously seemed, and the City of Montgomery’s support appears to be one of the hospital’s last options to remain open under its current ownership.
Ahead of the Montgomery City Council vote set for Jan. 31, Ron Dreskin, Jackson Hospital & Clinic’s interim CEO, and Alan Wilen, chief restructuring officer, announced that their plan to ensure financial stability for Jackson Hospital going forward is to ask the city for a $20.5 million guarantee on a loan “that we need to take until a final solution is made, which would be a permanent financial restructuring.”
“I want to make sure this is clear: We are not asking for a dollar of funds from the City of Montgomery. What we are asking them is to guarantee the financing that we require to get through the next period of time,” Dreskin said. “If we fail to make these payments… If we fail to get this guarantee, it’s going to be difficult to get the cash we need going forward.”
Employees hold signs during a rally and press conference on Thursday January 30, 2025 where Jackson Hospital, in Montgomery, Ala., is asking for a guarantee on a loan to keep the hospital running.
Under this proposed arrangement, the City of Montgomery would be liable for the hospital’s debt on the loan should the hospital fail to make a payment.
“The downside for the city financially is that if the bondholders were to ever call the loan, the city would step into their position, which would include all of the services at the hospital and all the real estate that sits here, so the overall risk to the city is limited,” Wilen said. “There would also be a time period between when the bondholders would call the loan and when the bondholders would expect that to be paid, a period where that can be rectified, cleaned up, assets sold … the likelihood of the city actually having to write a check at any point in time here is very, very, very minute.”
Jackson’s financial woes
Among things contributing to the hospital’s financial woes include, as Dreskin said, “increased costs with the pandemic, poor reimbursement rates, uninsured people who don’t get insurance from their companies,” and, in the words of Wilen, “an administrative problem where we could not officially bill and collect for the work we’ve been providing to patients.”
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Though Wilen and Dreskin did not provide much in specific updates on how the hospital is ensuring its financial stability ahead of asking the city for this guarantee, they said that their work has been an effort to lead the hospital in the right direction.
“Some of that [the tangible steps taken to restructure] is that we are training people here on how to do things in a way that is done in other parts of the country, more efficient ways,” Wilen said. “Certain people who were here before were not providing the right guidance to the hospital, and Ron and his team are coming in and working with the folks who are here to provide guidance and direction as necessary … We have put a lot of this together and fixed a lot of this today so we can be viable in the future as a financially viable, stable hospital.”
Jackson Hospital employees gather during a rally and press conference on Thursday January 30, 2025 where Jackson Hospital, in Montgomery, Ala., is asking for a guarantee on a loan to keep the hospital running.
Discussions with Montgomery County
Wilen said that though the hospital pursued discussions with Montgomery County before this, the county “has decided they don’t have the ability to [make a similar deal] at this point in time.” Wilen said that this plan — asking for a guarantee from the city — doubles as an effort to show community support for the hospital in order to substantiate their credibility to lenders.
“The key to this is that when I initially approached the county, I told them that I know writing a check for $20 million, $30 million is a lot of money,” Wilen said. “I’m not asking for a check, I’m asking for a guarantee, which has the likelihood of being called to be minimal, but it provides third parties who are not in this community the understanding that this hospital is important to the city … If the people who are local here can’t support the hospital, then why should somebody who lives on the other side of the country as a lender put money into this hospital to keep it alive?”
Jackson Hospital Intirim CEO Ron Dreskin speaks during a rally and press conference on Thursday January 30, 2025 where Jackson Hospital, in Montgomery, Ala., is asking for a guarantee on a loan to keep the hospital running.
Wilen said that, if the city agrees to the request, Jackson Hospital will have “the runway we need to place a plan and structure and keep the hospital going into the future.” If not, the hospital’s outlook appears grim.
“We may need to shut the hospital [if the city does not give Jackson a guarantee],” Wilen said. “I am also working on other alternative sources of financing that don’t require the guarantee but put a lot more pressure on the process here and on the structure overall.”
Outlook for employees
In October, the hospital initially said that “employment at the hospital has not seen any changes due to the events,” but considering the hospital’s financial status, Wilen said at the Jan. 30 rally that employment is “always a concern in this kind of situation.”
“As long as the hospital is open, the employees will all be here, we need them,” Wilen said. “We had no intentions of doing any kind of mass layoffs, but if we have no ability to finance a hospital, to pay payroll, operate the facilities, and deliver care, then we have no choice but to shut the facility down. I do think at this point in time, with some of the feelings we are getting from city council, that we will get this to pass and we will keep Jackson open.”
Though the city has not voted on whether or not to greenlight this guarantee, some city officials have shown support for Jackson Hospital & Clinic. Councilwoman Marche Johnson and Councilman Glen Pruitt spoke at the rally, with Johnson saying that on account of its role in the community and surrounding areas, it’s in the city’s best interest to keep the hospital open if a pathway to do so can be found. Additionally, Montgomery Mayor Steven L. Reed issued a letter of credit support for Jackson Hospital & Clinic on Jan. 7.
Montgomery City Councilwoman Marche Johnson speaks during a rally and press conference on Thursday January 30, 2025 where Jackson Hospital, in Montgomery, Ala., is asking for a guarantee on a loan to keep the hospital running.
How did we get here?
Jackson Hospital, a historic private hospital with deep history in the Montgomery area, saw its credit rating removed from CreditWatch and its S&P Global Ratings credit rating lower to a “D” on Sept. 4 — indicating default on financial obligation — after a missed interest payment of $60 million. The previous rating of “CC” indicated high vulnerability to default.
S&P confirmed on Sept. 4 that most of the hospital’s long-term debt consists of money owed on 2015 bonds. The hospital’s bondholders posted an acceleration notice on Aug. 9 demanding full repayment, and S&P said they are aware that Jackson Hospital’s liquidity was “very thin and insufficient” to meet this request.
Jackson Hospital employees gather during a rally and press conference on Thursday January 30, 2025 where Jackson Hospital, in Montgomery, Ala., is asking for a guarantee on a loan to keep the hospital running.
Nearly two months later in late October, Edward Crowell, the chair of the hospital’s board of directors, announced that, with bondholder support, the hospital was pursuing a restructuring plan. Allen Wilen and Ronald Dreskin — both of EisnerAmper Advisory Group, which self-describes its company mission on its website as “help[ing] you tackle your toughest business challenges and guid[ing] you through critical decisions” — were introduced to direct the restructuring efforts.
The two-pronged effort to address the fallout of the default sees Dreskin leading the hospital’s day-to-day operations and Wilen spearheading restructuring efforts as well as reporting directly to the hospital’s board of directors.
Jackson Hospital & Clinic currently services over 200 patients in the emergency room, 225 patients in beds, more patients awaiting admission, sees 1,000 clinic visits daily, and employs 2,100 people, 1,300 are Montgomery residents. Dreskin said that, in asking for the guarantee, they hope to address the availability of healthcare in Montgomery that is already lacking.
“The upside [of getting this guarantee] is that we will not only continue providing services but we will do so and thrive,” Dreskin said. “We’ll be able to see more patients more productively and in a more financially astute way. The downside [of not getting the guarantee] is that we are unable to provide for them, forcing other hospitals in the community — who I’ve already indicated cannot handle the current load of patients we have here — into their systems. You would have a dire financial crisis that would affect every single person in Montgomery.”
Sarah Clifton covers business for the Montgomery Advertiser. You can reach her at [email protected] or follow her on X @sarahgclifton.
This article originally appeared on Montgomery Advertiser: Jackson Hospital’s last lifeline hinges on support from Montgomery
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