Bankrupt Alabama Hospital’s Closure Risks Disaster, Report Warns

A patient care ombudsman filed a report warning about the “devastating impact” to local residents from the potential closure of one of Alabama’s largest healthcare institutions.

Jackson Hospital & Clinic, a 334-bed hospital in Montgomery, filed for Chapter 11 in February 2025 after grappling with rising labor costs, a high proportion of uninsured patients, and stagnant reimbursement rates. The central Alabama community relies on the critical services provided by the hospital, according to the report filed Monday in the US Bankruptcy Court for the Middle District of Alabama.

“Periods of high demand could quickly become public health disasters because, without Jackson, the Central Alabama healthcare system does not have the capacity and resources to safely handle increased patient volume,” the report said.

Ombudsman Suzanne Koenig urged stakeholders, including Blue Cross and Blue Shield of Alabama and the city of Montgomery, Ala., to prevent the consequences that would be caused by Jackson Hospital’s closing.

Jackson Hospital is the “proverbial heart of the Central Alabama healthcare system,” the report said. The hospital generally treats patients with lower socioeconomic means or who lack access to transportation, according to Koenig.

The hospital has about 55,000 emergency department visits each year, playing a critical role in maintaining emergency care capacity throughout central Alabama, the report said.

The hospital provides essential maternal and child health services and conducts nearly 6,100 surgical procedures annually, according to the report. The company’s outpatient care network also handles more than 237,000 visits annually, the ombudsman said.

Jackson Hospital has provided “safe, timely, and high-quality care to its patients” throughout the bankruptcy proceeding, according to Koenig.

Montgomery in April secured court approval to provide $22.5 million in emergency funding to help Jackson Hospital as it works to reorganize its operations.

The provider sued Blue Cross and Blue Shield of Alabama in December 2025 for more than $250 million, claiming the insurer held a monopoly over the state’s commercial health insurance and maintained discriminatory reimbursement rates.

Burr & Forman LLP represents Jackson Hospital.

The case is Jackson Hosp. & Clinic, Inc., Bankr. M.D. Ala., No. 2:25-bk-30256, report 6/8/26.