Mercy Hospital To Stay Open, Get New Name As $1 Purchase Approved

CHICAGO — State hospital regulators have approved the $1 sale of Mercy Hospital from a bankrupt hospital group to a recently formed nonprofit.

Under the deal given the green light Tuesday, the name of the city's oldest hospital will change, and it will no longer operate as a Catholic hospital.

Insight Chicago, formed for the takeover by a health care provider with a 20-bed hospital and several outpatient facilities in Michigan, is set to take over the historic hospital from Trinity Health, a multi-billion-dollar Catholic health system with nearly 100 hospitals, also based in Michigan.

The Illinois Health and Facilities Services Review Board signed off on the deal with a vote of 5-0, with one abstention and one absence. WBEZ reported some board members said they had concerns about the proposal, but the state's application approval standards compelled them to reluctantly vote in its favor.

“We applaud the vote by the board today that will help support continuity of care for South Side patients," hospital officials said Monday in a statement to Crain's Chicago Business. "After a lengthy process that included the evaluation of dozens of proposals, the Insight proposal was the only one that had both the financing and a commitment to run a full-service community hospital with emergency and maternity services.”

Mercy CEO Carol Schneider said rejecting the deal would be "catastrophic to operations" at the hospital, according to the Chicago Tribune. Schneider said 14 potential buyers expressed interest in the death, but some did not want to operate it as a full-service hospital, two required state funding, and another wanted to partner with another hospital.

Trinity, which took over the hospital in 2012, last month declared Chapter 11 bankruptcy after an abortive attempt to attain approval from state hospital regulators to shut down the hospital, which was rejected by the state review board in December. Company officials reported Mercy was losing about $7 million per month.

This month, hospital officials began sending layoff notices to dozens of staff, and the facility had been scheduled to shut down at the end of May. The board's decision indicates the 400-bed hospital is likely to remain open into the summer.

RELATED: Mercy Hospital Files For Bankruptcy, Set To Shutter

Insight CEO Dr. Jawad Shah is a neurosurgeon, a member of the faculty at Michigan State Medical School, and the co-director of the Center for Cognition and Neuroethics, which is jointly administered by his firm and the University of Michigan.

“Our intention is to operate at full-service,” Shah said, according to the Associated Press. “We are in this for the long haul.”

Shah, a neurosurgeon, described the hospitals operating rooms as underutilized and told the board the hospital could become solvent by beefing up the number of brain surgeries it conducts, WBEZ reported. But he noted Trinity officials remained committed to closing the hospital even as they worked to finalize a takeover.

Insight plans to offer an emergency department, rehabilitation center, stroke programs, behavioral health assistance, an obstetrics unit, intensive care unit and inpatient medical surgical beds.

In 2019, the hospital generated nearly $225 million in revenue and provided $9.1 million in charity care, the cost of which to the hospital ownership was less $3.3 million, according to the filings with the state board.

Trinity officials said the hospital requires at least $100 million in capital investments over the next five years to "maintain a safe acute care environment."

Rush University Medical Center confirmed it is prepared to assist Insight as the hospital transitions to new ownership, Crain's reported.

Mercy Hospital, located in Bronzeville since 1863 and at its current 2525 S. Michigan Ave. location since 1968, was founded in 1852 as the first chartered hospital in Chicago when the Sisters of Mercy converted an old rooming house near Rush Street and the Chicago River.