Mercy Hospital and Medical Center is sprucing up its operations and physical appearance while waiting for a better bid from a potential suitor, the facility’s top executive says.
The storied South Side hospital is still losing money on operations, but executives say an improvement from two years ago is giving them more time to be choosy about buyout offers.
Mercy has had a comeback of sorts when you consider where the hospital was three years ago. At that time, the hospital was traumatized by a series of management blunders by former executives who left in 2000 when the nuns who serve on the hospital’s board uncovered huge financial losses.
Mercy lost about $6 million on operations for the fiscal year ended June 30, Mercy executives said, citing unaudited financial statements. That compares with a $6 million loss in fiscal 2002 and a whopping $43.7 million operating loss piled up in fiscal 2001.
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“We are pretty pleased with the progress we have made,” said Sister Sheila Lyne, Mercy chief executive, who left her job as the City of Chicago’s top health official three years ago to lead the hospital’s turnaround.
“We have positive cash flow. The less weak we become, the better we are,” she said.
Waiting in the wings is a consortium of Chicago-area hospital operators that had their combined bid of $50 million turned down by Mercy this fall.
The group–which included Thorek Hospital and Medical Center in Chicago, Resurrection Health Care in Chicago and Sisters of St. Francis Health Services of Mishawaka, Ind.–is still interested in a deal for Mercy, but its representatives would not say whether they are gearing up for another proposal.
Sources close to the potential bidders say Mercy is supposed to give them an official response from an October meeting facilitated by the Catholic Archdiocese of Chicago and Cardinal Francis George. The archdiocese is working with Mercy to ensure the hospital is sold or merges with another Catholic health-care firm.
Mercy executives say the consortium’s proposal was “unacceptable in terms of structure and price,” Lyne said. “We are in a position to look at these things and take time with it.”
Mercy isn’t ruling out a deal with the consortium, but wouldn’t comment on the terms that it seeks or whether it will begin accepting other offers.
Meanwhile, Mercy continues to improve as money becomes available.
For example, the hospital this month will open a new $2.5 million emergency department. The project doubles the size of the emergency facilities to 15,000 square feet and includes additional treatment suites and nurses stations, according to James McHugh Construction Co.
Founded in 1852, Mercy is Chicago’s oldest chartered hospital. It is perhaps best known for its ties to influential Chicago Democrats such as the late Mayor Richard J. Daley and former congressman Dan Rostenkowski, who both have family members still involved with various advisory boards and hospital fundraisers.
In fact, it was Mercy’s clout with powerful South Side Democrats in the Illinois legislature that helped the facility win a $4.5 million grant last year from the state’s Illinois FIRST infrastructure program. Most of the grant was used to pay for the emergency room upgrade, Lyne said, with the balance going to other renovations, including an outpatient cardiovascular center.