Alabama Hospital in Danger of Bankruptcy

Story first appeared in the Wall Street Journal.

The battle over Jefferson County’s hospital for the poor has spilled over into its Chapter 9 bankruptcy case, illuminating another financial hardship facing Alabama’s biggest county.

Against threats that the 319-bed facility may one day close, a patient of Cooper Green Mercy Hospital has asked the county’s bankruptcy judge to protect the stream of money that is supposed to flow to the facility.

The county was ordered by a circuit court Judge to set aside more than $70 million in 2009 as part of an earlier lawsuit, which is now put on hold along with other lawsuits since the Alabama county’s bankruptcy case began five months ago.

In court papers filed with the U.S. Bankruptcy Court in Birmingham on Monday, a former patient who also chairs the hospital’s advisory board, said that county leaders have only paid only a portion of that $71.4 million. Furthermore, she accused the county of initiating a piecemeal and serial, department-by-department, closure of Cooper Green Mercy Hospital in violation of that earlier circuit court order.

The same court order said that the county needs to inform the court before it closes the hospital, according to court papers.

The county owns the hospital, which runs partly off a 2 cent sales tax that the county collects. In earlier court papers, Jefferson County estimated that its so-called indigent care fund, which treats low-income residents who can’t afford insurance and aren’t covered by a government program like Medicare or Medicaid, gets about $3.1 million each month.

But the inner city hospital’s finances have come under scrutiny as state and county leaders question whether the facility has made enough financial sacrifices while other county departments such as the sheriff’s office and the public works department are pressed with steep cuts. The county has laid off more than 1,000 employees in recent years.

Hospital executives have said that their operations haven’t been spared. The chief executive of Cooper Green, told the Birmingham News earlier this month that some patients are waiting as long as four to six months to get an appointment.

County leaders voted to place the municipality under Chapter 9 protection last November, triggering the largest municipal bankruptcy case in U.S. history. Most of the county’s $4 billion worth of debt is owed to bondholders that funded upgrades to the county’s sewer system, which had been seeping sewage into local streams through more than 3,000 miles of underground pipes.

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