Chicago’s Mercy Hospital to Get $50 Million From New Owner

Mercy Hospital and Medical Center’s new owner will invest $50 million in the next two years as it works to rebuild a facility once slated for shutdown.

Insight, which took over June 1, will create a “comprehensive plan to increase services and meet community need,” a representative said in an email Wednesday. It will also appoint three independent community board members within 90 days and restore a full emergency department. Insight last week said it also intends to revive Mercy’s status as a teaching hospital as part of a plan to operate Mercy as a full-service hospital “through 2029 and beyond.”

The survival of Chicago’s oldest hospital was by no means assured. Its troubles, including a poorer, sicker population that lacked private insurance, predated the pandemic. The higher costs and halting of more profitable elective procedures due to Covid-19 further strained U.S. hospitals and heightened the disparity between those struggling to stay solvent and larger and more affluent systems.

“Hospital acquisition is going to be very region specific” and depend upon factors like Medicaid expansion, said Felicia Gerber Perlman, who co-heads the bankruptcy and restructuring group at law firm McDermott Will & Emery in Chicago and wasn’t involved in the Mercy case. Insight may be able to direct more resources and focus to Mercy, she said.

Mercy’s former owner, Trinity Health Corp., planned to shutter Mercy but instead put it in Chapter 11 in February after the state rejected its plan to cease operating. The filing made it one of a wave of urban hospitals seeking bankruptcy in the past couple years, most recently by Heights Hospital in Houston on Tuesday.

Insight’s offer to buy the hospital for $1 met community, labor and political resistance, with critics charging that the Flint, Michigan-based company hadn’t run a facility on the scale of 258-bed Mercy. Community leaders pleaded for the state to delay the sale and instead urged that a group of Black physicians and a local hospital take over. But the Illinois Health Facilities & Services Review Board in March approved the transfer to Insight.

Insight is a biomedical company with specialties that include neuro- and orthopedic surgery. It also operates a surgical hospital in Warren, Michigan.

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

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