Jackson Extended a Predatory, High-Interest Loan to an Alabama Hospital in Bankruptcy – and He Makes More Money if the Hospital Closes
New reporting from the Atlanta Journal-Constitution reveals how much billionaire Rick Jackson personally profits off of potential hospital closures – and states like Alabama and Georgia’s failure to expand Medicaid.
The AJC’s Riley Bunch reports on how Jackson’s billion-dollar healthcare company offered Jackson Hospital in Montgomery a high-interest loan that “gives Jackson’s company close control over the hospital and puts him first in line to be repaid.” Part of the agreement includes “millions in other fees” and a “14% interest rate – that increases to 19% if payment is missed,” meaning Jackson will make more money if the hospital fails.
Key excerpts:
- At the time Jackson Hospital filed for bankruptcy last year, Rick Jackson’s medical staffing company was the facility’s second-largest creditor with nearly $10 million in unpaid bills.
- That’s when Rick Jackson’s investment group offered […] a $35 million loan that gives Jackson’s company close control over the hospital and puts him first in line to be repaid.
- Like Georgia, Alabama has experienced a steady stream of hospital closures over the past decade, many of them in rural communities — though not all. The impact of Jackson Hospital’s potential closure could be compared to the loss of the Atlanta Medical Center in 2022, after which the city’s other facilities shouldered the burden of caring for its patients.
- Both states already have high rates of uninsured residents, and those numbers are expected to continue to increase drastically following Congress’ decision to end federal pandemic-era subsidies under the Affordable Care Act.
- “We have had a solution for a long time, just like Georgia has,” said Hyden. “States who have expanded Medicaid have experienced many fewer hospital closures by tremendous degree.”
- But if elected, Rick Jackson says he would follow a line of Republican governors who are opposed to expansion in favor of programs with work requirements and federal grants to help ease the state’s healthcare woes.
- The situation with the Alabama hospital puts a spotlight on the magnitude of Rick Jackson’s influence in the healthcare sphere and raises questions about what it could mean for Georgia to have a top industry executive running the state.
- Rick Jackson’s Democratic opponent, former Atlanta Mayor Keisha Lance Bottoms, is campaigning on the promise to push for Medicaid expansion — and the Republican’s healthcare fortune is at the center of the Democrat’s attack lines.
- “My opponent, who has a healthcare company in the state, who received a billion-dollar, no-bid contract for that healthcare company in 2020, does not want to expand Medicaid,” Bottoms told a crowd of supporters at a campaign stop in Brunswick last week.
- Rick Jackson’s business capital is so large he debated purchasing the Jackson Hospital outright but ultimately told Alabama Gov. Kay Ivey that the cost to turn the facility around — between $250 million and $300 million — was too high of a price tag.
- His $35 million loan to the hospital comes with a 14% interest rate — that increases to 19% if payment is missed. The hospital also agreed to pay millions in other fees.
- Meanwhile, local elected leaders describe the community as at the mercy of negotiations.
- “We have made progress, but the challenge became the city and the county being caught between two giants: Jackson Healthcare and Blue Cross Blue Shield of Alabama,” Montgomery Mayor Steven Reed told the Atlanta Journal-Constitution.
- The situation has also sparked debate about whether the kind of private investment, like Jackson’s massive bailout loan, has a place in healthcare management at all.
- “There are two places where CEOs and businesses shouldn’t be in charge: and that’s law offices and doctors’ offices,” said Jane Adams, a healthcare consultant who previously worked with organizations advocating for Medicaid expansion.
- Experts are also warning that the strain on struggling hospitals across the country like Jackson Hospital in Montgomery is only going to worsen after Congress cut Medicaid spending in the “Big, Beautiful Bill.”
- According to KFF, an independent health policy research organization, the bill is expected to cut Medicaid spending by $911 billion over the next decade.
- In Georgia, that could mean anywhere from $6 billion to $10 billion less in Medicaid funds.
- “Cuts to federal healthcare spending of that magnitude are likely to have consequences for hospitals in general,” said Zachary Levinson, director of the KFF Project on Hospital Costs. “It could lead some to lay off staff, offer fewer services or close altogether.”
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