ACTION 8 UPDATE: Blue Cross Blue Shield of Alabama responds to Jackson Hospital’s plea for help
ACTION 8 UPDATE: Blue Cross Blue Shield of Alabama is speaking on Jackson Hospital’s request that the insurance company provide more money as the hospital struggles through bankruptcy.
The hospital has new leadership and a new plan they say will keep the facility open and make it profitable within five years.
Part of that effort has been to ask Blue Cross Blue Shield of Alabama to provide $91 million of the estimated $293 million they say is needed for the hospital to fully recover.
“Frankly, we had not heard that number before the communication that we received, so that was a bit surprising,” Joe Oaks, who is the vice president of provider contracting and pricing for Blue Cross Blue Shield of Alabama told Action 8 News.
Last Wednesday, Jackson Hospital’s new CEO, John Quinlivan, and new Board Chairman Charles Evans presented a financial plan to local, state and federal officials in hopes of securing additional funding.
So far, $187 million has been committed, leaving a $106 million shortfall.
While the hospital wants $91 million from Blue Cross Blue Shield of Alabama, the insurer has offered $35 million.
“Our best estimate was that we were about 30% off of what Blue Cross pays other large hospitals in the state, and so that was the basis for our request,” CEO Quinlivan said.
Oaks says Jackson Hospital only treats about 17% of Blue Cross Blue Shield’s patients in the River Region. That means the majority of BCBS patients are treated at the other two hospitals in Montgomery. Oaks says the amount the insurance company pays Jackson is more than fair.
“We account for what we think is approximately 25% of the hospital’s total revenue. So again, I think that’s important. So if we have 17% of the volume, our volume at those facilities, and then 25% of the hospital’s revenue, we are going a little bit above what we would say is our volume for revenue,” Oaks said.
Board chairman Evans said, “In our estimation, the hospital has been underpaid for years by Blue Cross, and it shows in the difference between what we can see in the way that Baptist is paid or the University of Alabama Birmingham. We need to close that gap and we need to close it quickly.”
Oaks said, “It’s really a comparison of apples to oranges, because those facilities provide a wider degree of service lines, and the patients that those hospitals see are generally a higher level of intensity.”
Oaks says BCBS does not want its customers to have to shoulder unnecessary costs.
Both Blue Cross Blue Shield and Jackson Hospital say they value their partnership and plan to continue the conversation, even as the hospital remains under bankruptcy court oversight.
The City of Montgomery has pledged up to $15 million, and Montgomery County has committed $10 million. They are waiting to see whether the state makes a commitment. Governor Kay Ivey’s office has only confirmed that an announcement will be coming soon.
As Action 8 News has reported, the hospital filed for Chapter 11 bankruptcy protection in February. Last year, it missed a $60 million interest payment on bonds.
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.
