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Hospital files for Chapter 7 bankruptcy

An 18-bed hospital faced with what administrators are calling "insurmountable financial challenges" is closing its doors, according to local business news. The hospital has been struggling for some time, and administrators recently made the decision to file for bankruptcy. Chapter 7 bankruptcy, as some Michigan residents are aware, is a powerful tool to deal with financial challenges like the ones apparently faced by this health care facility.

The hospital suspended all emergency care as of May 12, and it intended to close all clinics by May 16 -- save a single clinic in operation at a satellite location since 2010. The three patients remaining at the parent site were transferred to other locations as of May 13. The nonprofit organization that runs the hospital said it would be laying off its 44 full-time and 40 part-time employees as well.

Administrators pointed to a national trend that suggests people are moving toward more urban-centered hospitals and away from rural settings. This appears to have been the root of this rural hospital's financial difficulties. The parent company credits the "selfless" work put in by the hospital's employees for its operation up until this point, and it expresses regret that the hospital will be unable to keep its doors open moving forward.

It is never an easy decision for an administrator or business owner to file for Chapter 7, a sentiment with which many Michigan business people can agree. However, in the long run, it makes more sense from a financial standpoint to liquidate existing assets to satisfy creditors than it does to continue to dig a fiscal hole and go deeper into debt. Clearing debts means clearing the way for a financially stable future.

Source:, "Nicholas County Hospital announces closing, to file for bankruptcy", Karla Ward, May 12, 2014

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