(Bloomberg)—Mercy Hospital and Medical Center filed for bankruptcy on Wednesday amid a controversial plan by its owner to close the historic Chicago hospital.
The Chapter 11 bankruptcy filing comes weeks after Illinois state health officials rejected plans by Mercy’s owner, Trinity Health Corp., to close the 258-bed medical center and open an outpatient center in Chicago’s South Side.
“The quality of care at Mercy is an increasing concern as physicians and other colleagues have left Mercy and operating losses have accelerated to $7 million per month,” Trinity’s board of directors said in a resolution dated Feb. 5 that authorized the Chapter 11 filing in U.S. Bankruptcy Court in Chicago.
Most departments are expected to shutter May 31, Mercy said in a statement today. The Illinois Health Facilities and Services Review Board, which late last year denied the hospital’s application to close, is scheduled to hear Mercy’s appeal on March 16, according to the statement.
“While the regulatory process continues, Mercy is losing staff, experiencing mounting financial losses, and challenging the hospital’s ability to maintain a safe environment of care,” the statement says. To ensure a safe transition for patients, Mercy plans to continue offering “basic emergency treatment services, diagnostic imaging and care coordination services until the anticipated opening” of a $13 million outpatient center later this year.
The board last month voted to deny Mercy’s application to open the center, but the hospital is appealing the decision.
The pandemic has exacerbated the financial struggles of many of America’s hospitals, including Mercy. Costs from treating Covid-19 patients soared at the same time they’ve faced limitations on profitable elective procedures.
The American Hospital Association estimated last year that hospitals would tally at least $323 billion in losses due to the virus through the end of 2020. But that didn’t account for costs like protective equipment or the continued surge in cases throughout the U.S. Even the $175 billion providers received from the CARES Act “falls far short of covering these losses,” the AHA said in a report last month.
Mercy Hospital, the first chartered teaching hospital in Chicago, listed assets and liabilities of more than $100 million each.
“Mercy has attempted to effectuate its contemplated clinical transformation plan but has been unable to do so as originally envisioned and management does not anticipate being able to do so in the future,” the Trinity Health board said in the resolution.
The medical center was among four financially struggling Chicago hospitals that planned to merge into a single entity. But the deal fell apart last year after lawmakers approved revisions to the state’s hospital assessment program, but declined to make funding available for the project.
"Mercy tried for many years to find a path to financial sustainability," the hospital said in the statement. "This included a multi-year national search for buyers and a robust transformation plan with other safety net hospitals. Unfortunately, neither path provided a viable future."
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