Mercy filed for Chapter 11 bankruptcy this week, saying in a Wednesday statement that it plans to shutter most departments May 31. It notes that safety is a concern as it loses staff and operating losses accelerate. However, the Illinois Health Facilities & Services Review Board in December unanimously voted to deny Mercy’s application to close. The board expressed concerns that closing the hospital would leave South Side residents—many of whom are Black and Brown—without access to health care during the pandemic.
Mercy said in statement today that it “has been open to transfer the hospital to any interested buyer with financial backing and operational experience,” but none have been identified. And while Trinity Health remains committed to offering outpatient and diagnostic services, the state health board last month voted to deny Mercy’s application to open a $13 million outpatient center.
Yesterday’s statement from elected officials says they’re “resolved to use the authority of the governor, attorney general and mayor of the city of Chicago to help protect the community.” But it’s unclear what recourse they may have.
Closing a health care facility without approval can result in a fine of up to $10,000, plus an additional $10,000 a month while the violation continues. Additionally, a facility could lose the ability to collect payments from the state, such as outstanding hospital assessment payments and Medicaid reimbursements. Still, industry observers say such fines might be preferable to the millions of dollars the hospital says it’s already losing.
Despite filing for Chapter 11 bankruptcy, Mercy was in the black.
Mercy posted net income of $4 million in fiscal 2020, compared with a net loss of $36 million a year earlier, according to Trinity’s financial filings. The Livonia, Mich.-based health system also owns three-hospital Loyola Medicine.
“Mercy Hospital & Medical Center filed Chapter 11 to ensure an orderly wind down of services where the quality and safety of patients will be protected,” the hospital said in a statement today. “We warned elected officials all along that these losses were unsustainable so they would not be surprised by our actions.”
In addition to Pritzker, the following officials signed the statement condemning Trinity: Ald. Sophia King, Rep. Lamont Robinson, Sen. Mattie Hunter, Ald. Pat Dowell, Ald. Leslie A. Hairston, Ald. Jeanette Taylor, Rep. Kam Buckner, Rep. Sonya Harper, Rep. Theresa Mah, Commissioner John P. Daley, Commissioner Dennis Deer, Sen. Robert Peters.
Meanwhile, the Illinois Department of Healthcare & Family Services, which oversees Medicaid in the state, on Thursday came out against Mercy's bankruptcy filing.
“We are extremely disappointed that Mercy chose this route, as opposed to working with the state and other willing healthcare partners to transform the hospital and sustain vital services to this community," HFS Director Theresa Eagleson said in an emailed statement. "We simply don’t believe they’ve done everything they could to work toward a different solution.”