Jackson Hospital issues warning of possible imminent closure if it doesn’t get financial help

MONTGOMERY, Ala. (WAKA) – Officials at Jackson Hospital warn that they could soon announce its closure unless the hospital gets immediate financial help from Blue Cross Blue Shield of Alabama.

The hospital’s board said it would announce the hospital’s closure on June 25 unless BCBS agrees to provide insurance reimbursements at a higher rate, comparable to what it gives Baptist Medical Center South.

If an agreement is not reached, the closure could happen sometime in July or possibly sooner, according to court documents obtained by Action 8 News.

The hospital, which entered Chapter 11 bankruptcy protection in February 2025, says it is running out of money in order to continue operations. It has claimed that BCBS unfairly reimburses Baptist Medical Center South at a higher rate.

It has warned several times since last year that closure was possible. This is the first time that it has attached a date to that warning.

According to court documents, Jackson Hospital alleges that during a recent status conference in court:

“Counsel for Blue Cross Alabama implied that Jackson Hospital is “crying wolf” and, according to Blue Cross Alabama, there is no imminent risk Jackson Hospital will be forced to close its doors if the emergency injunctive relief Jackson Hospital seeks is not granted. Blue Cross Alabama’s argument is not only callous – completely dismissing and ignoring the devastating impact the closure of Jackson Hospital would have on the availability of necessary and life-saving healthcare services to the multitude of individuals who live in the numerous counties Jackson Hospital faithfully serves (the same individuals Blue Cross Alabama is supposed to serve) – the argument is also flat out wrong.”

Jackson Hospital is asking that unless BCBS agrees to a higher reimbursement rate on its own, that the court set the preliminary injunction hearing for a date on or before June 25. “Otherwise, it will be too late to save Jackson Hospital,” the documents said.

Jackson Hospital previously filed a lawsuit in the U.S. Bankruptcy Court for the Middle District of Alabama, seeking a judgment of $1,399,999.94 against BCBS of Alabama.

The hospital claims BCBS withheld that amount of funds following Jackson Hospital’s Chapter 11 filing last year.

The lawsuit alleges that when the hospital entered Chapter 11, federal bankruptcy law immediately enacted an “automatic stay.”  It says that generally prevents creditors from independently seizing funds without the approval of the bankruptcy court.

BCBS Director Sophie Martin previously released this statement regarding Jackson Hospital’s claims:

“Blue Cross and Blue Shield of Alabama is aware of the lawsuit filed by Jackson Hospital on Monday, February 16, 2026. The hospital’s allegation that our company is “withholding $1.4 million in patient reimbursements” is not accurate. It is regrettable that the hospital has twisted our gesture of voluntarily providing it with an over $1.5 million cash advance — one of the actions Blue Cross undertook to help Jackson Hospital navigate its financial difficulties.

“Although Blue Cross had the right under our written agreement to begin recouping our advance to Jackson Hospital in October 2024, we waited another seven months before beginning recoupment at the hospital’s request. Jackson Hospital’s bankruptcy proceedings did not prevent such recoupment. In this case, recoupment occurred with Jackson Hospital’s express agreement and knowledge. To now claim otherwise is inaccurate.”

As Action 8 News has reported, the hospital filed for Chapter 11 bankruptcy protection in February of 2025. It missed a $60 million interest payment on bonds.

In filing for bankruptcy, Jackson Hospital said it experienced significant financial pressures in recent years due to increased labor costs, stagnant reimbursement rates, a challenging payor mix and fallout from COVID-19, among other factors. It said without Medicaid expansion in Alabama, it suffered significant financial losses due to its care for uninsured people. In 2023 alone, the hospital said gross charges related to the care of uninsured patients exceeded $45 million.

Jackson Hospital CEO John Quinlivan told Action 8 News in November that with support from the city, county and state, he expected the hospital’s restructuring plan to be approved, allowing Jackson Hospital to fully exit bankruptcy in the second quarter of 2026.

However, he says that to date, Jackson Hospital has only secured about $61 million of the $293 million the hospital has said it needs to fully recover. The money is coming from various government and private sources, including a limited financial pledge from the State of Alabama.

Gina Maiola, the communications director for Gov. Kay Ivey, released this statement today:

“As a reminder, the $40 million from the state for capital expenses at Jackson Hospital would only be issued once Jackson Hospital emerges out of bankruptcy. Governor Ivey maintains her position that it is imperative Jackson Hospital stays open. This is a negotiation between Blue Cross and Jackson Hospital, so I will defer to them right now. The governor is hopeful there is a resolution reached between these two entities.”

Jackson Hospital is licensed for 344 beds, serving Montgomery and the River Region as a community not-for-profit facility. It  opened in 1946 with 37 beds and five doctors.

Action 8 News is seeking a new response from BCBS on Jackson Hospital’s statement. This story will be updated.

READ: Jackson Hospital Brief Filed in Bankruptcy Court