Before Mercy Hospital Decided To Shut Down, Its Parent Company Tried To Sell It. Nobody Would Buy It.

In a letter filed with regulators, the Near South Side hospital revealed that its parent company tried to sell the struggling hospital for more than a year before deciding to close it.

views of Mercy Hospital
A view of Mercy Hospital and Medical Center and nearby apartments in Chicago on Feb. 19, 2008. Eric Allix Rogers / Flickr
views of Mercy Hospital
A view of Mercy Hospital and Medical Center and nearby apartments in Chicago on Feb. 19, 2008. Eric Allix Rogers / Flickr

Before Mercy Hospital Decided To Shut Down, Its Parent Company Tried To Sell It. Nobody Would Buy It.

In a letter filed with regulators, the Near South Side hospital revealed that its parent company tried to sell the struggling hospital for more than a year before deciding to close it.

After years of financial losses, giant national hospital network Trinity Health tried for more than a year to sell Mercy Hospital in Chicago or affiliate it with another health system. Instead, Mercy plans to close.

Mercy disclosed the attempted sale to Illinois health care regulators in a new letter filed this week. Trinity, which took over Mercy in 2012, shopped Mercy to more than 20 potential partners for 18 months.

“Ultimately, none expressed an interest in Mercy Hospital,” the medical center’s attorney Edward Green wrote in the letter.

As Mercy and other hospitals around the nation grew emptier before COVID-19 struck, and as patients sought cheaper outpatient care and had more options that could take them to doctors outside of their communities, Trinity and Mercy decided on a whole new strategy. Mercy would drop expensive hospital care in favor of outpatient service, the letter outlines.

Fast forward to this week, when Mercy announced plans to close the nearly 170-year-old hospital on the Near South Side. The hospital treats a majority Black, low-income and elderly population — those dying at high rates of COVID-19 — but also draws patients from nearby Chinatown.

There’s been an outpouring of support and sadness from longtime patients, employees and doctors who trained there, wondering where people will go for medical care and where future physicians will learn when Mercy closes.

The South Side is already a health care desert, patients and health care advocates say. Mercy has one of the busiest emergency departments in the city and is one of few places on the South Side to deliver a baby.

Many of the hospitals that might absorb Mercy’s patients were already struggling financially before COVID-19 hit in March. The pandemic has made finances even tighter.

In its letter to regulators, Mercy further outlined what led to its latest plan and potential future in Chicago.

“Please know that it is important to Mercy Hospital to continue its legacy in the community, albeit in a different model,” Green wrote.

As fewer patients filled Mercy’s beds, Trinity poured hundreds of millions of dollars into the hospital to keep it afloat. But patients still went elsewhere. Within the last few years, bigger, richer hospitals were building gleaming new outpatient centers and siphoning off some of Mercy’s patients, Green wrote.

Mercy also recognized that residents in the communities around the hospital disproportionately suffered from chronic conditions, and needed to see doctors before they got sicker and more expensive to treat.

So in August 2019, Mercy approached the Illinois Department of Healthcare and Family Services, which runs the Medicaid health insurance program for low-income and disabled people. Mercy planned to close the hospital and turn it into an outpatient center with urgent care.

That led HFS to broker a deal between South Shore, St. Bernard and Advocate Trinity hospitals to ultimately merge with Mercy and create one big health system. The hospitals at the time were only about half full of patients.

But the estimated $1.1 billion merger plan didn’t pan out. The hospitals asked state lawmakers to cover nearly half of the cost and this spring lawmakers said no.

Now, Mercy plans to close the hospital sometime between February and May next year, as well as its group of clinics. Mercy instead plans to open an outpatient center that could treat more than 50,000 patients a year. It would focus on preventative and urgent care to avoid pricey hospital stays and emergency room visits at other hospitals.

“… Many people will question and challenge this decision because it involves closing Mercy Hospital,” Green wrote. “But, in order to continue to serve its communities, the Mercy Board of Directors and Trinity were required to challenge the traditional concept of an inpatient hospital and explore a new outpatient model of care.”

Mercy CEO Carol Schneider has declined interview requests.

Kristen Schorsch covers public health on WBEZ’s politics and government team. Follow her @kschorsch.