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Clinics associated with Galesburg Cottage Hospital file for bankruptcy

In a letter sent out to staff, the owner of both the clinics and Cottage Hospital said the clinics would remain open and operational.

GALESBURG, Ill. — The uncertainty of health care in Galesburg may be growing, after a local clinic group filed for bankruptcy shortly after the New Year holiday. 

Knox Clinic Corporation filed for chapter 11 bankruptcy on Monday, Jan. 3, in a Michigan Federal Court. The corporation has locations in Galesburg, Knoxville and Monmouth. 

The clinics are run by Dr. Sanjay Sharma, owner and CEO of Galesburg Cottage Hospital and Pontiac General Hospital in Michigan. Cottage has recently come under fire from the federal government for unsafe conditions.

Although the clinics rent out space from Cottage, and are operated by the same person, the bankruptcy filings are only for the clinics, not the hospital. A spokesperson for Cottage confirmed the filing would not impact Cottage and the two remain separate businesses.  

Staff were notified of the bankruptcy filing on Tuesday, Jan. 4, in an email sent by Sharma, in which he called the move "necessary, considering recent developments." 

The announcement came just days after the Centers for Medicare & Medicaid Services revealed Cottage would no longer receive payments for patient services after Jan. 14. 

CMS reports revealed the hospital was so understaffed and mismanaged that it had created a dangerous situation for both staff and patients. A spokesperson for CMS told News 8 the conditions inside the facility were so severe, it posed a serious risk of injury or death

By filing for bankruptcy, Sharma wrote the clinics could remain open, and would be able to preserve services. 

"The plan is to continue to operate the clinics during and after the bankruptcy. We intend to come out of this process stronger and more sustainable for the long term," read the email. "I will continue to update you as decisions progress. All these changes have had to be made quicker than in an ideal scenario, but I know we can continue to work together and be on the other side this a more sustainable organization." 

Knox Clinic Corporation provides services such as gynecology, urology, neurology, orthopedic/podiatry, general surgery and family medicine. 

In a statement to News 8, Cottage said: 

"The clinic corporation intends to continue to operate throughout the process and emerge with a more sustainable model." 

Neither Dr. Sharma nor his lawyer returned multiple requests for comment. 

Find WQAD's full Galesburg Cottage Hospital coverage here.

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