Rick Jackson-backed hospital in Alabama reaches deal to exit bankruptcy

An Alabama hospital being kept open with the help of a $35 million loan from Georgia’s Republican nominee for governor is now on a path out of bankruptcy.

Rick Jackson, whose surprise campaign earlier this year upended Georgia politics, was Jackson Hospital’s second-largest creditor when it filed for bankruptcy last year with nearly $10 million in unpaid bills.

A legal agreement over reimbursement rates between Jackson Hospital in Montgomery and insurance giant Blue Cross Blue Shield of Alabama, filed in court this week, means the community hospital will remain open after its leaders warned it would soon shutter without a deal.

Jackson has no familial ties to the hospital despite sharing the name, but his financial stake in the facility increased more than threefold when he offered a $35 million loan from his investment group to keep it from closing. The loan also gave Jackson’s company close control over the hospital and put him first in line to be repaid.

Jackson’s loan to the hospital came with a 14% interest rate that increases to 19% if payment is missed. The hospital also agreed to pay millions in other fees.

Details of the agreement between the hospital and Blue Cross Blue Shield over reimbursement rates remain sealed in court.

Lawyers for the hospital argued that releasing the “confidential financial arrangements, payment obligations and reimbursement terms that are the product of extensive negotiations” would “reveal competitively sensitive pricing information,” according to a motion to keep the dealings confidential.

During a news conference Monday, John Quinlivan, president and CEO of Jackson Hospital, praised the Jackson Investment Group for its support.

“We solicited hundreds of companies across the country and beyond — not one of them was willing to lend money to this bankrupt hospital,” he said, “except for Rick Jackson and the Jackson Investment Group.”

Like Georgia, Alabama has had several hospitals close over the past decade, many of them in rural communities. Both states already have high rates of uninsured residents, and those numbers are expected to increase after Congress’ decision to end pandemic-era subsidies under the Affordable Care Act.

Alabama, like Georgia, has not expanded its Medicaid program, the government-funded health insurance program for people with low incomes. Hospital executives point to that decision as a source of their financial troubles, while critics contend mismanagement was to blame.

In his campaign for governor, Rick Jackson opposes traditional Medicaid expansion, saying instead he wants the federal government to give Georgia the money in the form of a block grant so the state could decide how to spend it.

His Democratic opponent, former Atlanta Mayor Keisha Lance Bottoms, has vowed to push for expansion, if elected.