Mercy Hospital of Detroit, celebrated for executing a financial turnaround in the mid-1990s, is slated to close its doors by March 1.
Its parent, Mercy Health Services in Farmington Hills, Mich., said the hospital has buckled under the weight of Medicare and Medicaid cuts and a rising uninsured population.
Last week's closure announcement came just two years after the hospital won the American Hospital Association's Comeback Award.
The inner-city hospital achieved modest profits in fiscal 1994 through 1997 following a string of losses. It has been managed by Detroit-based Henry Ford Health System since 1990.
Since mid-1998, Mercy has cut 185 full-time positions, restructured programs and closed ambulatory-care centers in an effort to improve its financial picture.
According to Mercy officials, the Balanced Budget Act of 1997 and other factors pulled the hospital back into the red. Government programs account for nearly 80% of its admissions, system executives said.
"We have sought creative solutions with other partners in the city, but everyone is facing the same challenges," said David Spivey, Mercy Hospital's chief executive officer. "We simply cannot continue to deliver care under the current scenario."
For fiscal 1999 ended June 30, the hospital lost $20 million on operations, $11 million from Medicaid cuts and $5 million from Medicare reductions, the system said. Net patient revenues totaled $117 million.
Similar losses are projected for the current fiscal year.
Mercy Health Services said it spent more than $215 million to support the east side hospital since 1990. In the decade, its average operating margin was negative 8.5%.
The system pledged to continue to invest $2 million per year on healthcare services for the uninsured in Detroit to continue its mission in the city. It hired a consulting firm to determine a use for the building.
Some of its 1,300 employees may be offered jobs elsewhere in the Mercy system. The hospital has 200 physicians on staff.
Meanwhile, nearby Trenton, Mich., could soon lose a hospital. Oakwood Healthcare in Dearborn and Henry Ford recently completed a merger study for their respective Trenton hospitals, 89-bed Oakwood Seaway Hospital and 148-bed Riverside Osteopathic Hospital.
The study concluded that Oakwood Seaway is the best location for consolidating services.