Downey Regional Medical Center Hospital Inc. late Monday filed for Chapter 11 bankruptcy, and said the hospital and emergency room would remain open during the reorganization

In a news release, the hospital said its Board of Directors unanimously approved the Chapter 11 filing after concluding that such action was in "the best long-term interests of the hospital, the community, hospital's employees, physicians, patients, vendors, and other stakeholders."

"Today's necessary actions will allow us to clean up the remainder of the financial morass that the current management team inherited that was over a decade in the making, and that we have been working to fix for two years," said Chief Executive Kenneth Strople said in a statement.

Downey Regional has 537 licensed beds and largely serves patients without any insurance or those who qualify for Medi-Cal, which pays hospitals less than private insurance. Its cash reserves ran out in March 2008, leaving the facility ill placed to respond to last year's credit crunch.

The hospital said it was working with its senior lenders to provide an immediate return to liquidity, but the news release did not provide specifics about the hospital's finances. Audited financial data that the hospital is required to submit to the Office of Statewide Health Planning and Development showed the hospital lost $10 million in the year ended June 30, 2008.

In an interview with the Business Journal late last year, Strople blamed previous management for lax monitoring of costs, insurance billing and receivables. But he also blamed much of the problems on rising costs and poor reimbursement rates, as well as the closure of nearby private and public hospitals, particularly Martin Luther King Jr./Drew Medical Center in 2007.

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