Trinity Health’s Mercy Hospital files for Chapter 11 bankruptcy protection

Mercy Hospital and Medical Center filed for Chapter 11 bankruptcy protection Wednesday as the Chicago-area community continues to fight to keep the safety-net hospital open.

Mercy Hospital has been largely operating in the red for years. Mercy’s parent company, Trinity Health, has tried to find suitable merger partners for the hospital and either downsize or completely wind down its inpatient operations. But Bronzeville residents have fought to keep the 400-bed hospital that predominately serves Medicaid beneficiaries fully operational.

In a Feb. 10 bankruptcy filing, Trinity claimed that operating losses averaged $5 million per month, totaling $30.2 million for the first six months of the 2021 fiscal year. Pending the bankruptcy court’s approval, Mercy would restructure and sell its assets to mitigate “significant and unsustainable financial losses.”

Trinity had applied with the state to close its inpatient services by May 31; it would open a $13 million outpatient clinic by Sept. 30 in its place, which would offer urgent care, diagnostic testing and care coordination services.

That application was unanimously denied in December by the Illinois Health Facilities & Services Review Board, which argued that area residents couldn’t afford a hospital closure as COVID-19 disproportionately impacts people of color.

Crain’s Chicago Business reported that State Rep. Theresa Mah, D-Chicago, asked during the meeting to table the decision during the pandemic, adding that not only would her constituents be left without a full-service hospital if Mercy closed, but also that hospital workers would be left without jobs during an economic recession.

Mercy Hospital, Advocate Aurora Health’s Advocate Trinity Hospital and South Shore Hospital and St. Bernard Hospital had planned to join forces to downsize aging, underutilized facilities and create a new hospital and several community centers. But those plans fell through when they couldn’t raise the $1.1 billion of capital required from the government, the hospitals and their parent companies, and private donations.

“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,” bankruptcy filings read. “The quality of care at Mercy is an increasing concern as physicians and other colleagues have left Mercy.”

Mercy recorded more than $250 million in operating losses from 2014 through 2018, according to HMP Metrics.

Trinity Health reported an operating income of $112.1 million on operating revenue of nearly $4.8 billion for the first three months of 2021 ending Sept. 30, compared to an operating income of $94 million on operating revenue of $4.81 billion in the same prior-year period.

Estimated restructuring costs for Mercy Health will range from $90 million to $115 million, pending regulatory approval, according to the latest court filing.

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