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Indiana hospital to close 4 months after doctor takeover

Physicians couldn't save Indiana's Winona Memorial Hospital from its financial problems.

By Katherine Vogt — Posted Sept. 20, 2004

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A group of doctors who took over a struggling Indianapolis hospital in May could not turn it around fast enough to survive its crushing financial woes, forcing the hospital to announce its closure.

In a lengthy statement released Sept. 2, Winona Memorial Hospital said it would begin closing the facility because of a lack of operating funds. No closing date was identified, but Winona said it would continue to care for patients until they were discharged or transferred to other hospitals.

The decision to close was made reluctantly by physician leaders, the statement said. They were concerned that it would leave a void in the medical needs of the community. But they also expressed hope that a private investor or corporate entity could become involved to help revive the hospital.

"Despite our loss of investment, we are proud of our attempt to save the hospital, and equally proud and thankful for the support of the hospital staff and those in the community who worked hard to keep Winona Hospital's doors open and to offer excellent medical care," said Robert E. Mehl, MD, a radiologist and chair of the board, in the written statement.

Physicians bought Winona in May from Leland Medical Centers Inc. The hospital was financially distressed at the time, according to the statement, owing millions to suppliers and other entities.

The hospital said it was plagued with a tremendous short-term cash flow problem. Expected real estate refinancing fell through, and the hospital was unable to secure other operating capital.

In late August, Winona announced that creditors had filed a petition to force it to seek Chapter 11 bankruptcy protection. At least one creditor, Indianapolis Power & Light Co., said it was owed nearly $400,000. It had cut off electricity to ancillary buildings around the hospital.

At the time, the hospital said it would stay open as it reorganized debt. But the physician leaders later learned that their senior lender would no longer fund operations, so the decision to close was made.

Winona, which opened in 1956, said it was one of only a few physician-owned community hospitals in Indiana.

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