Two Alabama hospitals have shuttered in 2024 and another hospital's future is up in the air after recently defaulting on $60M in bond payments.
Montgomery, Ala.-based Jackson Hospital & Clinic has hired a chief restructuring officer to reduce costs and shore up its finances while hospital leaders focus on day-to-day management. Last month, Jackson Hospital defaulted on about $60 million worth of bonds, which comprises 86% of its long-term debt.
The bondholder requested full payment after the hospital failed to make interest payments, but S&P Global said the Jackson Hospital's liquidity "is very thin and insufficient to meet the bondholders' demand for full payment." The rating agency lowered the hospital's bond rating from "CC" to "D" — its lowest bond rating.
The hospital is negotiating with bondholders to resolve the bond interest payment default. It is also evaluating operations to develop a financial turnaround plan. Cost reductions are expected to be a significant part of the plan, but no layoffs have been reported as a result of these changes.
The hospital did not respond to Becker's request for comment.
Rural and community hospitals across the country continue to battle financial challenges including rising costs, diminishing reimbursements and widespread workforce shortages.
Nearly 40% of hospitals are still losing money, according to a recent Kaufman Hall report, and 21 hospitals have closed across the U.S. this year, including two in Alabama.
Thomasville (Ala.) Regional Medical Center, a 29-bed acute care facility halted operations in September due to financial challenges and staff shortages. The hospital also recently defaulted on $35 million in loans.
A court-ordered receiver has stepped in to assume control of the hospital and is responsible for managing all hospital assets, including equipment, property and bank accounts. A status conference for the hospital's future is set for Nov. 4.
Earlier this year, Regional Medical Center Health System closed Stringfellow Memorial Hospital, a 125-bed facility in Anniston, Ala.
Outpatient surgeries and gastroenterology services are currently provided at the Stringfellow campus, but all inpatient services were halted July 19, according to the health system's website. The hospital's emergency department transitioned to RMC's main hospital campus about 1 mile away.