MOUNT CARMEL DIOCESAN GENERAL HOSPITAL was founded on July 27, 1959 by Bishop Alfredo Ma. Obviar under the name "Clinic Of Mount Carmel" together with Dr. Milagros Correa, a prominent physician in Lucena City. The site chosen for it was the Old Lucena Catholic Cemetery. The hospital was put up to respond to the medical needs of the clergy, religious and poor of the diocese. The free hospitalization of the members of the Lucena clergy is part of what Bishop Obviar Envisioned for the hospital. He also intended it to serve the indigents. Initial funding for the clinic reportedly came from the personal donations of both founders. The priests of the diocese gave their monthly financial contribution to support the needs of the clinic. It started operation on August 1st of the same year as a maternity and children's clinic with only sixteen (16) beds.

With the improvement of its facilities over the years, the clinic gradually evolved into a general hospital. It is at this point that the name 'Clinic Of Mount Carmel' was changed to Mount Carmel General Hospital and eventually to Mount Carmel Diocesan General Hospital on November 24, 1995.

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