Dr. Charles N. Carraway founded the hospital in 1908, in a house in Pratt City, now a neighborhood in Birmingham, with the capacity to treat 16 patients. Carraway was an innovator in many ways: "Carraway financed the new facility by getting Birmingham businesses to agree to pay $1 a month per employee, or $1.25 per family, for treatment. It was managed care before managed care even had a name." In 1917, Carraway bought a lot on the corner of Sixteenth Avenue and Twenty-fifth Street, in the Norwood neighborhood, and moved the hospital, which came to be called the Norwood Hospital. In 1949, the hospital received $200,000 in federal money to add a nursing wing.
In the 1940s, Charles Carraway donated the hospital to the Methodist church, and being renamed Carraway Methodist, with Carraway remaining the chair and CEO. In 1957, Charles Carraway suffered a stroke. In response the hospital board elected his son, Dr Ben Carraway, to take over the running of the Facility.
He increased the hospital from 256 beds to 617. A Christmas star placed on the roof in 1958 became a noted Birmingham landmark. The star remained long after the hospital closed. In 1993 Dr Robert Carraway, son of Ben Carraway (who had served part of his residency and his entire career at the hospital) was elected to take over as CEO and chair when Ben Carraway too had a stroke.
The hospital fell into financial difficulties in the beginning of the 2000s. At the time, it was run by the founder's grandson, Dr. Robert Carraway. According to The Birmingham News, two factors were responsible for the institution's financial demise: the decay of the Norwood neighborhood and "decades of decisions favoring patient care over profits." Hospital leadership made unsuccessful investments, did not adjust staffing or service lines to adjust to diminishing patient volume, or adequately respond to the rapidly changing healthcare delivery environment of the time. It shut down on October 31, 2008, after nearly a century in operation. In 2009, the facility was being considered as the new home for the 340 patients at Bryce Hospital in Tuscaloosa.
In 2011, The Lovelady Center, a non-profit women's rehab center, purchased the hospital property and renamed it "Metro Plaza.