The Left-for-Dead Hospital That Got a Second Chance for $1
(Bloomberg Businessweek) -- Word of Mercy Hospital’s demise began to circulate just after 9 a.m. on July 29, 2020. The hospital’s chief executive officer summoned the medical executive committee to an unscheduled conference call. She told them she’d be sending a staffwide memo shortly and felt a heads-up was in order.
“The decision to discontinue services at Mercy Hospital was not an easy one,” the memo read. More words followed—something about decreasing hospital reimbursements and ballooning capital expenses. Dr. Adele Joy Cobbs, an emergency physician on the committee, felt blindsided. She listened for the reactions of the other committee members on the call. The seconds ticked by.
“There was absolute silence,” Cobbs recalled afterward. “Not a word from anyone. It just reflected the disbelief.”
Disbelief because Mercy had been a Chicago institution since 1852, when the city was a splintery warren of 35,000 and was still rising from the lakeside mud. The part of the South Side where Mercy sits, now called Bronzeville, was then known as “the country.” The location allowed the hospital to survive the Great Chicago Fire of 1871 and to treat many of its victims. When a would-be assassin’s bullet penetrated the rib cage of Teddy Roosevelt during a Milwaukee campaign stop in 1912, he recovered at Mercy. Every year thousands of babies arrived wailing within its walls, and some would return decades later to die. In the past 50 years, as more of the city’s wealth has shifted to the North Side, Mercy, with its 422 beds, has been tagged with the label “safety-net hospital.” The population it serves is now mostly minority, and most depend on either Medicaid or Medicare, if they’re insured at all.
Cobbs had never thought of Mercy as a safety net; it was an anchor, holding the neighborhood in place. Her father had lived in a high-rise two blocks away; she saw the building every time she got out of her car in Mercy’s parking lot. Her cousins, aunts, uncles—they all went to the hospital for care. Their neighbors were among the 1,500 people employed there as nurses, cooks, doctors, administrators, and maintenance workers.
After medical school, Cobbs worked her way through hospitals in other cities, in affluent suburbs, in rural communities. Two of them were safety nets that later went under. Four years ago she returned to the South Side to become the associate director of Mercy’s emergency department.
“To me, this was the dream job,” she said.
A job that would carry her all the way to retirement—or so she’d thought until that conference call. That same morning, shortly after she disconnected, she started typing emails and placing telephone calls. She’d served for almost a decade on the Chicago Board of Health, so her contact list was full of people in government. She reached out to city council members, to the mayor’s office, to the governor. Soon she was logging into virtual roundtable discussions with “the electeds,” as she calls them, brainstorming strategies to keep Mercy alive.
“That’s when I began my fight,” she said.
She wasn’t the only one. Many different people and interest groups fought for Mercy. To save the hospital was to champion social justice, or to seize a business opportunity, or both. Success would defy an accelerating trend throughout American cities. Philadelphia’s Hahnemann University Hospital, another so-called safety net that had survived for 171 years, closed in 2019 after years of financial losses. That same year, the 158-year-old Providence Hospital in northeast Washington, D.C., which served some of the poorest parts of the city, shuttered its inpatient and emergency services. Months later, D.C. officials announced that United Medical Center—now the only general hospital east of the Anacostia River, in the city’s poorest quadrant—would close in 2023 or 2024 because of losses.
In Chicago, the groups hoping to save Mercy worked independently, unaware of one another. Each of them eventually confronted a perverse reality that’s baked into the modern American marketplace: the places with the most acute demand for medical services are the least likely to get them.
The Hospital butts up against Interstate 55, 10 lanes of traffic that carve a bold line through Chicago. On one side of the highway sits America’s largest convention center, McCormick Place, where the surrounding hotels provide a transition northward to the skyscrapers downtown. On the other side of the interstate, Mercy has stood as a gateway to the South Side.
The health disparities on the opposite sides of that line are more extreme than anywhere else in America. The life expectancy for someone who lives in the Near North Side neighborhood of Streeterville is 90 years. In Mercy’s neighborhood, 3 miles straight down Michigan Avenue, life expectancy plunges by 12 years. It keeps dropping as you head south, bottoming out at 60 years in a neighborhood 6 miles from Mercy.
Hospitals haven’t thrived on the South Side, despite the intensity of need. In the past two decades, several hospitals serving the area have either closed or significantly reduced their services. In 2009, Michael Reese Hospital, a 120-year-old institution in the same ZIP code as Mercy, bowed out, citing financial pressures.
That left Provident Hospital as Mercy’s closest neighbor. In 2010 budget cuts forced Provident to shutter its obstetrics unit. Two months after Mercy announced its planned closure last year, Provident downgraded its emergency department from a full-service facility to a “standby” unit. That meant Provident would try to stabilize emergency patients so they could be rerouted somewhere else. The obvious choice was Mercy, which was limping toward its planned end.
Last summer, as they surveyed this enfeebled landscape, community advocates in Chicago warned that the Near South Side was becoming a “health-care desert.” They began holding small rallies demanding that someone—maybe the city, maybe the state—step in to stop Mercy’s closure.
Once upon a time, that might have been a reasonable expectation. For most of the 20th century, local governments ran the hospitals that cared for their poor. But starting around 1970, health-care costs began steeply and steadily rising; per capita spending on health care is now 31 times more than it was then, according to federal figures. The public hospital model became a burden for local taxing districts, and more jurisdictions turned their health-care systems over to the private sector.
Today, fewer than 10% of general hospitals in America are owned by governments or a public hospital district. Those that remain—a list that includes Provident, which is run by Cook County—often complain they’re forced to compete on an uneven playing field. Privately operated hospitals aren’t held to the same standards of social responsibility, they argue, and as a result can cherry-pick patients likely to bring them a profit.
Mercy was purchased in 2012 by Trinity Health, a not-for-profit company that operates 90 hospitals and about 100 health-care clinics nationwide. Last year Trinity’s executives said the company had been subsidizing Mercy’s losses for several years. They emphasized that the company was driven by a charitable social mission, but that charity had its limits.
Starting in March 2020, hospitals all over the country were flooded with Covid-19 patients and forced to postpone elective surgeries, an important source of profit. That cut deeply into their margins. Pre-pandemic, the average American hospital operated on an 8.8% profit margin. The margin at safety-net hospitals was just 2.9%, according to industry figures. But Mercy’s bottom line was consistently red; since 2012, Trinity had lost $187 million on the hospital. In the first months of the pandemic, the company said, the losses accelerated by about 25%.
That added financial pressure couldn’t have come at a worse time. The South Side was the part of the city hardest hit by Covid in those early months, and Black Chicagoans were dying at a rate 2.5 times higher than Whites. The city was broke, facing a record $1.2 billion shortfall for the coming fiscal year. Chicago Mayor Lori Lightfoot said the combination of a public-health catastrophe and a fiscal emergency represented “a crisis unlike anything we have experienced in our lifetimes.”
Fearing that the financially struggling hospitals in the most affected parts of the city couldn’t absorb a Covid surge, the city approved a hastily contrived solution: a $66 million emergency field hospital inside McCormick Place, directly across the highway from Mercy. But when Chicagoans got sick, they did what they’ve always done: They turned to their hospitals. In the end, only 38 patients were treated at the convention center.
When Trinity bought Mercy from the Sisters of Mercy, the order of Catholic nuns that founded it, the company made a series of promises to local officials in exchange for tax breaks. It pledged to keep Mercy running as a full-service hospital until at least 2029. So before Trinity could close Mercy, its executives had to convince a state board of regulators that they’d exhausted other options.
A series of hearings was scheduled for the fall and winter. Right away, the regulators let it be known that they didn’t plan to let the company off easy. The board members demanded to know how, exactly, a hospital like Mercy could lose so much money. Were the executives exaggerating the losses? Was this a case of mismanagement? Why couldn’t they sell the hospital to another company?
“As a public-health person, I am really distressed that this is going on in the midst of a global pandemic,” said Dr. Linda Murray, one of the board members.
From their offices in Michigan, the Trinity executives smiled politely and pleaded their case.
They placed much of the blame for the hospital’s struggles on the way medical insurance works for the poor. Only 22% of Mercy’s patients were covered by private insurance plans, they explained. A majority were on Medicaid or were uninsured. The patient mix is important because different insurance plans pay hospitals different amounts for the same services. Private insurers reimburse hospitals roughly twice as much for all services as does Medicare, according to a 2020 survey by the Kaiser Family Foundation. Medicaid, the government plan for the poor, pays the least: Another Kaiser study reported that Illinois’s Medicaid program reimburses hospitals just 61% of what Medicare does. Taken together, these surveys suggest that when a private insurer pays $1,000 for a procedure, Medicaid in Illinois pays about $307. Federal and state aid programs compensate hospitals that provide charity and reduced-cost care for poor patients, but Trinity officials said it’s not nearly enough to bridge the difference.
“The Medicaid funding model does not cover the cost of care,” Edward Green, a lawyer representing the company, told the regulators, “let alone leave any room for equipment or capital repairs or improvements.”
In the closure application it submitted to the state, Trinity wrote that those repairs and improvements couldn’t be put off much longer. “Mercy’s aging facility will require at least $100 million of additional capital investments in the next five years to maintain a safe and sustainable acute care environment,” the application read.
To generate that money, Mercy would need to attract more privately insured patients. But it was facing world-class competition in the form of Chicago’s top-tier hospitals: Rush University Medical Center, Northwestern Memorial Hospital, and the University of Chicago Medical Center. How could Mercy attract privately insured patients with the means to travel to those hospitals, which also eagerly courted them?
It couldn’t, Green told the regulators. The big hospitals were “siphoning off commercial and Medicare patients,” in his words. The only new patients Mercy could attract seemed to be the poor who were abandoned after the closures and downgrades of other South Side safety nets. “The burden of treating those patients has largely landed on the doorstep of Mercy,” said John Capasso, Trinity’s executive vice president.
The executives suggested that this wasn’t their burden to carry, and that no one would necessarily get hurt if they dropped it. “There is a hospital with an emergency department within 5 miles of Mercy Hospital, but Provident Hospital elected to downgrade the level of its emergency department services,” Green noted. “Provident Hospital can simply return to its original status and begin treating emergency department patients again.”
Trinity executives also argued that Chicago had too many hospital beds; at any given time, plenty of those beds remained vacant. David Ansell, senior vice president for community health equity at Rush University Medical Center, heard that with a measure of skepticism. “If you look at the number of beds in the region, there are probably too many—for sure,” he told me. But most of those extra beds sit on the city’s North Side, he said, and they’re the profitable beds. “There’s a big hole on the Near South Side of the city.”
In mid-December the regulatory board unanimously rejected Trinity’s request to close Mercy. “I do not believe Mercy has made a reasonable case that their services will not have an extremely negative impact on the South Side of Chicago,” said Murray, the board member.
Because of that rejection, if Mercy went ahead with its plans to close, it could be fined $10,000 each month by the state. But Mercy executives reported it was now losing about $5 million every month. The board’s rejection was toothless in the face of raw economics. On Dec. 15, Mercy announced it would close anyway.
Its last day of operations was set for May 31, 2021.
Inside the Dearborn Homes public housing project, Etta Davis opened Facebook and stumbled across a post about the hospital’s pending closure. This was news to her. She started asking around, wondering if she was the only one in the neighborhood who hadn’t heard.
“Nobody in my community knew about it,” she said. “Nobody knew. I was like, ‘You mean to tell me Mercy didn’t even give their patients the right to know they’d be closing?’ ”
She’s 66 years old, with diabetes, high blood pressure, a heart condition, “plus a few other things.” For years, all the doctors she regularly saw—her primary-care physician, endocrinologist, nephrologist, cardiologist, and gastroenterologist—worked out of Michael Reese Hospital. When that hospital closed, she had to round up her medical records and find new doctors at Mercy.
By that time, she was living closer to Mercy anyway, after having moved into an apartment on the third floor of one of the Dearborn Homes high-rises. (“I told them, ‘Don’t put me higher than three, because the elevator’s always breaking, and I can’t be going up those steps like that.’ ”) She now serves on a neighborhood advisory committee at Dearborn Homes, which is less than a half-mile from Mercy. Davis guessed that of the 600 or so units in her complex, more than a third are occupied by seniors who regularly need medical care.
“It’s the same thing all over again,” she said, describing the closure of Mercy. “We’re all talking to each other, saying, ‘So what are we supposed to do now?’ ”
Davis answered the question for herself: She was going to make some noise. In October she hopped on a bus to go to the Hyatt Regency McCormick Place, where a public hearing about Mercy was being held in a conference room.
Davis was the first member of the public to arrive. She found a chair, draped her coat over the back, and waited for her name to be called. Mercy’s CEO and the hospital’s chief medical officer spoke first, explaining why a closure was a regrettable necessity. Then Davis was called to the podium.
Speaking through her mask, she talked about how Mercy doctors helped her tamp down stratospherically high blood sugar levels. About how her sister, suffering cardiac arrest and respiratory failure, had been saved in the hospital’s emergency department—twice. “I know she would have died if they had taken that extra time to transport her across town to another hospital,” Davis said.
The longer she spoke, the more fired up she got. She’d carefully written out her speech on lined notebook paper, but as she neared the end, she went off script, calling out city and county leaders by name, saying she wanted them to speak up about the closure, to take a stand to stop it. “We need to hear from you,” she said. “And I can’t hear you!”
In the weeks and months after the hearing, she took her passion outside, joining a series of “Save Mercy” rallies on the hospital’s grounds.
Several of the rallies were led by Jitu Brown, who was born at Mercy and whose mother once worked as a nurse there. In 2015, Brown helped organize a campaign to save Dyett High School, which was the only open-enrollment school left in the neighborhood after a series of consolidations. Brown led a hunger strike, which ultimately paid off. After 34 days, the city relented to his group’s demands, agreeing to reopen Dyett as an open-enrollment arts-based school.
“Health care, education—these are basic things, and yet we have to fight just to have them in our communities,” Brown told me.
One day in the fall, Davis and Brown traveled to City Hall, where their group blocked traffic in the street, waving “Save Mercy Hospital” signs. They marched through the financial district and in front of the offices of state administrators.
“Everyone talks about Black Lives Matter, but if that’s really true, why are they closing our hospitals and our schools?” Davis asked a cluster of people standing nearby.
I asked Brown what he and the other protesters really wanted: Did they want Trinity to continue to operate Mercy, or did they want someone else to take over?
“We want Trinity to sell it to another hospital, or to an investment firm,” he said. “Someone whose values are in line with Mercy’s mission, which throughout its history had been about justice and serving the poor.”
Finding another buyer should be simple, he said. But the Trinity executives continued to insist it wasn’t. Capasso, Trinity’s executive vice president, told the state board that in 2018 the company hired a broker to solicit offers from 20 other hospitals throughout the Chicago area. “None of those hospitals responded with any interest in purchasing Mercy,” he said. “We did go through an exhaustive process.”
Since the closure announcement, he said, a handful of interested parties had approached the company. “But as we did our due diligence with them,” Capasso said, “none of them wanted to operate Mercy as a full-service, acute care hospital.”
As he spoke, however, multiple groups were sketching out proposals to do exactly that.
Just as Cobbs was beginning another eight-hour shift in Mercy’s emergency department early this year, a man was rushed through the doors, his body swelling with water and waste. His kidneys had begun to fail.
Normally Cobbs would admit the patient to the hospital and the urology team would take over. But Mercy had cut its urology services weeks before. Cobbs needed to transfer the patient to another hospital. “The problem we’re running up against is that there are no beds,” she said after that shift. “All of those patients are now overcrowding these other peripheral hospitals.”
Hours passed, while Cobbs and the struggling patient confronted the consequences of the South Side’s reduced hospital capacity. Finally the emergency department found a spot for him in a suburban hospital 16 miles west of Mercy. “It literally took a whole shift for that patient to be transferred to Loyola,” Cobbs said.
Mercy’s slide accelerated throughout the winter. The first visible symptom was an exodus of nurses. By the end of 2020 a majority of Mercy’s nurses and nurse practitioners—who are in high demand at hospitals around the country because of an industrywide shortage—had left for other jobs. The state jumped in and provided emergency support, “loaning” about 20 state-employed nurses to Mercy to prevent dangerous staffing shortfalls.
As the nursing corps shrank, Trinity began shedding other types of workers. Before, Cobbs worked with two or three resident physicians during each emergency-room shift; now there was just one. The behavioral health unit was pulled from the ER, as were cardiac catheterization services. In February, Mercy’s ER was placed on “indefinite bypass,” which meant its staff was instructed to decline ambulance drop-offs. Afterward, most of the emergency patients were walk-ins or were driven to the door by friends and relatives.
“Now the hospital is a very different environment,” Cobbs said a few weeks after the downgrade. “That’s not to say we don’t have acuity, because you’d be surprised at what walks in the door. We’ve had quite a few patients that were on the brink of death. Or dead, for that matter.”
As part of the effort to find a buyer for Mercy, Cobbs helped form an advisory group comprising Black doctors who lived or worked in the community. “We were sort of on standby for whomever might come in and save the hospital,” she said. The Black doctors group, as they were informally known, began examining some of Mercy’s most vexing problems and started drafting potential solutions. They discussed which departments they’d keep and which they might eliminate to reduce losses and shift more emphasis to preventative care, and how they might renegotiate reimbursement rates with insurers.
Throughout the winter and spring, Lamont Robinson, the Illinois state representative whose district includes Mercy, served as a link between the advisory group and potential buyers. Late last year, Robinson told me that he and other state lawmakers had found someone to save Mercy. “I’m happy to report that, with the governor’s assistance, we do have a buyer,” he said. “It’s a local hospital. I cannot share the name, but we’re in negotiations now with Trinity and this buyer.”
That prospective buyer was Humboldt Park Health, a 200-bed facility about 8 miles northwest of Mercy. Cobbs’s group of doctors began talking to that hospital’s leaders about drafting a takeover plan. Throughout February, Cobbs waited to receive from Trinity a detailed assessment of Mercy’s facilities—a document that would help guide her group’s recommendations to revamp Mercy.
On a Friday in early March, she and other members of her group were asked to attend a meeting with Governor J.B. Pritzker’s staff. During that meeting, the staff revealed that Trinity had agreed to sell the hospital—but not to Humboldt Park Health. The buyer would be a company in Michigan called Insight. Trinity planned to sell Mercy to Insight for $1.
Cobbs was stunned. “I’ve never heard of Insight,” she said afterward. “Nobody has.”
At the end of July 2020, over the Muslim holiday of Eid, Dr. Jawad Shah visited his sister in Chicago’s Hyde Park neighborhood. He hopped on a bike for some morning exercise and headed north, tracing the Lake Michigan shoreline. When he neared the tangle of overpasses marking the junction of Lake Shore Drive and I-55, his eye sought out the white, 13-story building with the honeycombed facade.
Shah, a neurosurgeon, had seen stories in the local media the day before about Mercy’s closure plan. He couldn’t grasp how such a storied facility, in such a vital area, could simply vanish.
“I was just thinking, ‘Wait a minute. Am I missing something here? Why, exactly, is this going to shut down?’ ” Shah recalled. “When you look at the lay of the land, and the desert that’s about to be created, it’s like, wait—this is not a good thing.”
Shah dashed off a text to Atif Bawahab, a business partner who helps run the neurosurgery clinic Shah operates in Flint, Mich.
“Eid Mubarak,” Shah typed, wishing him a happy holiday. “Please buy Mercy.”
He was half serious. At the time he assumed other healthcare providers would surely make bids on the place. Most of them probably would have more resources than he did, and more experience serving large, urban communities. But seeing the building planted an idea in his head: This might be the perfect place to build on what he’d achieved in the first 53 years of his life.
Shah was born in Pakistan and emigrated to Canada with his parents when he was a baby. He grew up in Winnipeg and went to medical school there. A Ph.D. and training in neurosurgery followed. He developed a niche in brain stem and complex spinal surgery and started a private practice. “Then,” he said, “I met a girl from Flint.”
He married her and moved in 2003 with his wife to her hometown, where his practice thrived. In 2008 he launched Insight, a neurosurgery center that began with a staff of four. He put a bid on a 16,000-square-foot building, which he hoped might become a clinic site, but his offer was rejected. Shortly after that, he stumbled across a less conventional space: a 600,000-square-foot former General Motors manufacturing plant. The empty complex was an eyesore in a town littered with abandoned factories. He paid less than $200,000 for it.
“It was a massive building, and it changed the entire vision of what we were to do,” Shah said.
He rented suites to commercial clients—a lawyer, a doctor, a trucking company, a food pantry. Then he worked out a deal with Diplomat Pharmacy, a Michigan company that had recently gone national and was on its way to becoming the country’s largest independent provider of specialty prescription drugs—the types of infrequently prescribed medications that retail pharmacies don’t often stock.
The city marketed the complex as a medical Silicon Valley that could help revive Flint, and Shah was celebrated as a revitalizing force. He hired orthopedic surgeons, more neurosurgeons, and several nurses. He opened an 18-bed rehabilitation center to treat victims of catastrophic brain and spinal injuries. He added an imaging center, specialists in pain and addiction management, and chiropractors, and he converted a gymnasium into a wellness center. Soon, Insight employed more than 300 people and was performing more than 1,000 surgeries each year.
Shah wasn’t just a surgeon anymore; he was a Jack Welch-quoting entrepreneur who began thinking of Insight as a business incubator. Some of the projects he’s backed seem relatively modest, like one that his 19-year-old daughter oversees: development of a natural oatmeal-based soap to treat dermatitis. Others are far more complex, such as a device Shah calls “an artificial spinal cord.” It’s a set of electronic implants that stimulates nerves and can induce precise movements in a patient’s hips, knees, or ankles. Shah is seeking U.S. Food and Drug Administration approval for its use as a rehabilitation device, and the grander hope is that it eventually will allow victims of severe spinal injuries to walk again.
Shah wasn’t sure if any of that history could persuade Trinity to consider his interest in Mercy as anything more than a whim. As late as last December, Trinity executives publicly stated that they hadn’t entertained any “serious” offers for Mercy. But Insight had begun looking into the purchase immediately after Shah texted Bawahab during his bike ride. After a couple of Google searches to figure out exactly what he was talking about, Bawahab grabbed the phone.
“I called Mercy’s main phone number and talked to the front-desk person,” Bawahab said. “I talked to them three or four times, and finally someone from Trinity called me back.”
At 33, Bawahab is 20 years younger than Shah, and the relationship between the two business partners resembles that of a mentoring uncle and a nephew. Shah exudes placid composure; his voice naturally adopts the unflustered authority of the doctor reassuring a patient. Bawahab is less restrained, more immediately expressive. His title in Flint is chief strategy officer, and it was clear from the start that Mercy, if they could somehow acquire it, would operate according to Shah’s vision, but Bawahab would oversee the on-the-ground implementation of it.
It wasn’t until the last week of 2020, after the state board voted against closure, that Trinity agreed to a face-to-face meeting with Insight. When the Trinity team traveled to Flint, Shah gave them a tour of the campus and an overview of his operations. He and Bawahab were ready to answer all sorts of questions about their medical operations. But the Trinity executives kept asking about a project that had little direct connection with health care: a youth community center in a once-abandoned school building. Shah bought the building in 2015 for $1.
The center, called the Sylvester Broome Empowerment Village, offers free training and programs for children in sports, music, visual arts, journalism, health, science, and the performing arts. Originally, Insight funded all of those programs. But Shah’s gift for finding external funding partners—charitable foundations, endowments, and private businesses—has allowed it to explode in size and ambition. The NFL, for example, is building a sports complex connected to the building. Michael Jackson’s daughter, Paris, helped fund the music studio inside the center. At the height of Flint’s water crisis, Will Smith’s son Jaden helped turn the building into a site for distributing clean water.
Trinity’s keen interest in the project surprised Bawahab, until he began to sense what was behind it. On the South Side of Chicago, those Trinity executives were cast as villains with no concern for the well-being of a community they didn’t belong to. If the next owners of Mercy were to have any chance of success, they’d need the local people on their side.
“Their whole thing was, ‘Do you guys really understand what you’re getting yourselves into?’ ” Bawahab said. “ ‘Have you dealt with this type of community before?’ ”
Insight and Trinity needed state approval to complete the purchase, and that required another public hearing, on March 12. Etta Davis and Jitu Brown were among those listening in. They heard the past three mayors of Flint pour praise on Shah, who in turn promised to be as engaged in community-building on the South Side as he’d been in Flint. They listened to Bawahab insist that the company was committed to building a world-class hospital—not just a safety net that offered a bare minimum of care.
“They said a lot of the right things,” Brown said afterward. “But we don’t know them. A lot of people come into our community and say the right things.”
The day after that hearing, Davis learned that Insight’s plans to save Mercy might not save her connection to the hospital, at least in the short term. She pulled an envelope from her mailbox. A letter informed her that one of her doctors would be leaving the hospital in May.
Your health and well-being are of utmost importance to us at Mercy. I encourage you to contact your health plan to choose another provider as soon as possible to ensure uninterrupted care.
Within days, Davis had received five of these form letters. Every one of her doctors planned to leave Mercy. The doctors, as it happened, had received letters of their own just days before—termination letters. Trinity, even as it talked with potential buyers, continued to gut Mercy, trying to cut losses and plan for a hard closure. Cobbs’s letter informed her that she would no longer be employed after 90 days. “It’s just ‘Thank you for your service,’ ” Cobbs said. “That’s it.”
Cobbs had been among those who spoke at the public hearing and urged the state to delay approval of the Insight deal. She noted that the community had been given no chance to vet Insight. And if a company from Michigan could buy Mercy for $1, why couldn’t her group of local Black doctors make the same offer?
She never got a good answer, she said. Trinity executives, who declined to be interviewed for this story, insisted that the other potential buyers that had approached the company lacked either the expertise or the financial backing required to operate a full-service hospital. Cobbs felt she hadn’t yet gotten the chance to prove that her group, when allied with Humboldt Health, could handle it.
Earlier that same week, Cobbs had sat on a concrete bench next to Mercy’s parking lot, wiping tears from her eyes. She didn’t want to look for another job. But she believed that the Black doctors’ group had been disrespected, and her future at the hospital was too uncertain. She felt as if she had no choice.
On March 22 the state approved the Insight sale.
In April and May, Insight held a series of meetings with doctors and community groups. At one of the meetings, the Chicago Health Equity Coalition, a group Brown and Davis were part of, confronted Insight with a list of demands. At the top of the list: The new hospital’s board of directors should include them. “We don’t need some community advisory board that has no authority,” Brown told me. “That is not acceptable to us.”
Shah and Bawahab didn’t rule out the idea of community members on the board. But the way they saw it, if they couldn’t restore Mercy to financial stability, the question of who was on the board wouldn’t ultimately matter. Because there wouldn’t be a hospital.
Transforming Mercy was complicated by Shah and Bawahab not having a clear view into what, exactly, they’d be trying to transform. Insight would take possession of Mercy on June 1. Before that, Shah and Bawahab couldn’t freely access the hospital. Consultations with the staff were limited, and Insight wasn’t allowed to conduct an independent assessment of the building’s condition.
Shah said he’d faced similar ambiguities before. In 2018, Insight bought a small hospital in Warren, Mich. The previous year, the hospital had lost almost $3 million. Insight took it over on Dec. 14, Shah said, and by Dec. 31 it was turning a profit. With only 20 beds, that turnaround doesn’t come close to approaching the complexity and scale of the challenge he faces with Mercy. Even so, he planned to apply many of the strategies they used in Warren to the South Side. “There’s tremendous waste in hospitals,” Shah said, “and lots of opportunities to be more efficient.”
One of the first things that needs to change, Shah and Bawahab decided, were Mercy’s operating rooms. For years they’d sat empty much of the time, while thousands of potential orthopedic and neurosurgery patients were transferred to other facilities. “If you have a hospital that has around 55,000 visits in the emergency department, and around 250,000 outpatient visits, how is it possible to do two neurosurgeries in a year?” Shah asked. “Why don’t we have intra-arterial treatments for stroke, which are super important to the community and reimburse the hospital well? These service lines have to be established.”
Not everyone believed it could be so easy, given that Trinity executives—who ran a successful company many times the size of Insight—had spent months saying they’d exhausted their ideas about how to turn a profit. When asked whether Insight’s plan can succeed in a part of the city where others have failed, the expert consensus seems to be upturned palms and a shrug of the shoulders: They don’t really know yet.
Ansell, of Rush, said the core of Insight’s plan—to fund basic services to a poor population through profitable surgeries—has become the last available option for safety-net hospitals. “Given our crazy health-care financing system that values profit over people in many ways, that’s the only way they can do this,” he said. One enduring market trend is working in their favor. “People really want to get care in their communities. They don’t want to go downtown if they don’t have to.”
“Good morning, freedom fighters!” Brown was surveying the rally crowd on the sidewalk outside City Hall, and he spotted a familiar face. “Miss Etta,” he said. “How are you doing today?”
Davis had come downtown with some neighbors for another Save Mercy rally, though it had been more than two months since Insight announced that its purchase would prevent the closure of the hospital. Brown and other community activists had warned in recent days that sinister dealings might be in the works—that Insight might be allowed to downgrade the hospital.
“We demand that Insight—who has resisted our efforts to put community members on the board, while they say they are our friends—we say, ‘If you want our support, we demand in writing a commitment for Mercy Hospital to remain a full-service hospital,’ ” Brown announced at the rally. “Not a specialty center. Let’s be clear. This body of freedom fighters here? We are the instrument of accountability from here on in for safety-net hospitals.”
Davis was angry—at the mayor, at Trinity, and even at the group of Black doctors that had unsuccessfully tried to bid on Mercy. The group’s interest in purchasing Mercy hadn’t been public until after the Insight deal. “Where were they last year?” she told me. “Why did they wait until the last minute to try to buy it?” Shah wasn’t spared, either. She aimed some of her sharpest barbs his way.
“We’ve had enough false prophets come into our communities,” she said at the rally, her voice digging down into a fierce, growling register. “Now put your pen where your mouth is!”
City and state officials were working on that with Shah and Bawahab. In late May, the two sides finalized a deal in which Insight promised that the hospital would remain a full-service facility at least through 2029; register as a nonprofit institution; continue to serve Medicare and Medicaid patients; and reestablish teaching programs for early-career doctors. Insight also committed to investing at least $50 million into the facility during its first two years of operation, maintaining charity care at the levels Trinity had provided, and reserving three spots on its board for representatives from the community.
After the deal with the city was announced, Brown said it felt like a victory.
“This is historic, right?” he said in late May. “When has a hospital that’s been slated to close in a Black community been stopped from closing?”
On May 31, the day before Insight took control of Mercy, Cobbs met several other staffers in the hospital parking lot for a tailgate celebration. They popped open sodas and shared homemade snacks and cookies to commemorate the end of an era. Afterward they walked into the emergency department for the last time.
“We said our goodbyes, kinda just took a picture, and handed it off,” Cobbs said. “And that was it.”
In the following weeks she’d land interviews at three other local emergency departments, and by the end of the summer she’d found a job that would keep her in Chicago. Things had worked out for her in the end. “I’m extremely excited and motivated,” Cobbs said.
At 12:01 a.m. on June 1, Shah and his team walked through the doors of their new hospital. For the first time in 168 years, this wasn’t Mercy Hospital. Shah changed the name to Insight Hospital & Medical Center.
The building he acquired had been traumatized by uncertainty, and he could see it in every empty room and hear it in every quiet hallway. Before Trinity announced its intent to close, about 1,200 people worked there. On the day he took over, 150 to 200 employees remained.
But Shah was happy. The hospital appeared to be in much better physical condition than he’d feared. “I’m not saying it’s great, but it’s pretty darned good,” he said. “It’s a nice building, and it’s well maintained. The floors are pristine.”
Later that week Bawahab welcomed about 120 people to a grand opening ceremony on the hospital’s grounds. He said he wanted to celebrate the acquisition and to generate excitement for the hospital’s potential—but he also wanted to temper expectations. It would take time to build it back up. “This will be a long journey, one that has already had some bumps in the road—and that will continue to have some bumps in the road,” he said during the ceremony.
Later, Bawahab said the handover from Trinity had been disconcertingly complex. In the weeks before the takeover, while Insight made plans to revive Mercy, Trinity continued to cut costs and slash services. The two companies were pursuing contradictory goals until the moment of transfer.
Within days, Insight began bolstering the hospital’s emergency services to meet the regulatory standards of a “comprehensive” department. The process was slow. By late September it still hadn’t completed the upgrade, and ambulances still hadn’t returned. A big reason, Bawahab said, was the shortage of registered nurses. The hospital had roughly doubled the number of employees in its first 100 days, to about 350, but it wasn’t enough to reestablish full emergency services, he said. “The bottleneck, unfortunately, is on the RN side.”
Insight restored several departments, including radiology, intensive care, mammography, pharmacy, laboratory testing, inpatient psychiatric services, general surgery, and outpatient obstetrics and gynecology. Neurosurgeons had begun doing spinal and brain surgeries inside the hospital.
Community groups continued to press the company for updates and meetings. The intensity of the public’s interest, Bawahab said, initially caught Insight off guard. “In Michigan, no one really cared about what we were doing and when we were doing it,” he said. “Over here, people want to know even before we’ve kind of decided for ourselves what the plan is.”
In September, Davis was among those attending a meeting with Shah, who offered an overview of the hospital services that had been restored. It was a start, she said, but the kind of care she needed, and the specialists who could give it to her, still hadn’t returned. Even so, Brown said his community group understood that the upgrades would take more than a couple of months. “We’re pleased with the progress the hospital is making,” he said. “It is expanding, and we know it’s a process.”
Shortly after the takeover, Shah walked through the hospital’s maze of hallways toward the emergency department. On this day it felt desolate. The admissions desk was unstaffed. After about five minutes of silence, a nurse ducked out of one of the side rooms, where a patient was waiting. Finally the department showed a sign of life.
“Hey, Brandon!” the nurse called to another staffer, who was bent over a sheaf of papers in a far corner of the room. “Can you grab the electrodes?”
Read next: Atlanta’s Wealthiest and Whitest District Wants to Secede
©2021 Bloomberg L.P.