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Mercy Hospital, Chicago: What does ‘losing money’ mean?

December 28, 2020

Topics: Quote of the Day

Though a state board rejected Mercy’s application to close, hospital officials are working to shut down by May 31. Activists want a moratorium on hospital closings and pressure from the city and state to ensure Mercy remains open.

By Maxwell Evans
Block Club Chicago, December 22, 2020

A coalition of activists are demanding elected officials maintain pressure on Mercy’s ownership to keep the hospital open or sell to someone who will.

The activists held a vigil Monday, a week after a state board unanimously rejected Mercy Hospital’s request to close. Board members agreed closing the Near South Side institution would negatively impact South Siders, especially in the middle of the coronavirus pandemic.

Mercy Hospital leadership announced in July the city’s first chartered hospital would shut down, citing monthly operating losses of $4 million and shifting trends in the field of health care away from inpatient services. The news came two months after a billion-dollar plan to consolidate the hospital with three others on the South Side fell apart.

Despite the Illinois Health Facilities and Services Review Board’s rejection of Mercy’s request, the hospital still has options for shutting down — and intends to take advantage of them.

If local leaders don’t take action, organizations within the coalition will mobilize against them in their next elections, Bennett said.

Coalition members include local representatives of the Kenwood-Oakland Community Organization, SEIU Healthcare Illinois, National Nurses United, Physicians for a National Health Program, White Coats for Black Lives, and several other groups.

While keeping Mercy open is the coalition’s focus for now, its battle for health equity reaches further.

Members are also organizing to address the dependence of safety net hospitals on Medicare and Medicaid reimbursements, “a racist system that in its structure is guaranteeing hospitals don’t have what they need,” said Jitu Brown, board president of the Kenwood-Oakland Community Organization.

Hospitals lost 13 cents on every dollar spent caring for Medicare and Medicaid patients in 2017, according to the American Hospital Association. Three out of every four Mercy Hospital patients pay through Medicare or Medicaid, according to a 2019 report.

The battle the keep Mercy open is part of a decades-long struggle to maintain critical health services throughout the South Side.

But health care has continued to shrink, shift or disappear altogether in the South and West sides for years.



By Don McCanne, M.D.

How could shutting down a safety net hospital in a region struggling to maintain critical health services advance the cause of health equity? It can’t.

So what reason is being given for the efforts to close Chicago’s Mercy Hospital? They are losing money, they say. How can a busy hospital lose money? They say that it is because three-fourths of the patient population is covered by Medicare or Medicaid, and the American Hospital Association claims that hospitals lose 13 cents on every dollar spent on these patients.

Wait a minute. If your home catches on fire, doesn’t the fire department show up to put out the fire? You have fire insurance on your home so that insurance is used to pay the fire department for its services? No. The fire department provides a public service that is funded by the government. We pay taxes to cover that service. We don’t call that a “loss.” We don’t call care and maintenance of our parks a “loss.” We don’t call highway maintenance a “loss.” They are strictly essential services most appropriately provided by the government.

How is health care different? Shouldn’t it also be a public service funded by the government? Well, it partially is through government programs such as Medicare and Medicaid, so we do acknowledge the legitimate role of government in health care financing. But because of the fragmented, dysfunctional method we have of funding health care, we allow tremendous waste in administrative excesses and we have a failure to set prices appropriately, and thus the government appears to underpay for services in comparison to the private commercial insurers (though the concept of cost shift has been refuted by Austin Frakt). When the dependence of safety net hospitals on Medicare and Medicaid can be legitimately labeled a “racist system,” clearly we have an intolerably dysfunctional health care financing system.

The point is that, although we spend more on health care than any other nation, we clearly are not spending it equitably. Though government funds are the major source of Mercy Hospital’s revenues, the amount by which Mercy comes up short in paying its cost of care is not a “loss,” rather it is failure to enact an adequate, comprehensive health care financing system that will meet legitimate costs while, most importantly, providing health care equitably to everyone.

Regular readers know the bottom line here. We need to replace our unjust health care financing system with a well designed, single payer, improved Medicare for All program. Under such a system, with regional planning, Mercy Hospital would be reinforced or replaced to help meet the needs of South Chicago’s residents. In no way would that be a “loss.”

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About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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