Chicago’s Mercy Hospital Files Bankruptcy Amid Plans to Shut

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 pandemic has exacerbated the financial struggles of many U.S hospitals, including Mercy. Costs from treating Covid-19 patients have soared at the same time they’ve faced limitations on profitable elective procedures.

“It’s a tragedy for our city,” Chicago Mayor Lori Lightfoot told reporters on Thursday. “We’ve got to figure out a way that we can fill the void that’s going to be left by Mercy.”

Lightfoot said she’s having conversations with Illinois Governor J.B. Pritzker and elected officials from the communities that Mercy serves. The loss of the safety-net hospital will be “devastating” for those neighborhoods, she said.

Covid Pressure

The filing “follows an orderly wind-down plan that has been in place for several months,” Mercy said in a statement.

“Mercy tried for many years to find a path to financial sustainability,” Mercy said. “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.”

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.

“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.

“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 case is Mercy Hospital and Medical Center, 21-01805, U.S. Bankruptcy Court in the Northern District of Illinois (Eastern Division). To view the docket on Bloomberg Law, click here.

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