As the historic Mercy Hospital on the Near South Side changes ownership this week – and gets a new name – Chicago Mayor Lori Lightfoot’s administration has negotiated a deal that gives the city some unique power over the new owners if they don’t keep certain promises.

WBEZ on Wednesday obtained a copy of an agreement that outlines the new stipulations for Insight Chicago to operate what’s now called Insight Hospital & Medical Center. The agreement requires Insight to keep the hospital running as a non-profit through 2029 and to resume accepting ambulances in the emergency room. That stopped earlier this year as Mercy had been preparing to close.

Additionally, the agreement says Insight must:

• Invest $50 million over the next two years.
• Resume teaching and research programs, either independently or in collaboration with other medical providers. Mercy was a robust teaching hospital, but that ended as Insight was taking over.
• Give three seats on the hospital board to community members. This is something community organizers, who rallied for months to prevent Mercy from closing, have called for.

“I have a responsibility as mayor to do the thing that I believe is in the best interest of the people of this city,” Lightfoot said Wednesday during an unrelated news conference. “Keeping that hospital open was a key priority for me.”

But Lightfoot also is stripping Insight of about $9 million that would have come from the city’s tax increment financing – or TIF – program, which is supposed to infuse public dollars into blighted communities, according to a city spokesman.

That’s even though the hospital in Bronzeville is a so-called “safety net” medical center that treats mostly low-income and elderly Black patients. It’s also a staple for the nearby Chinese-speaking Chinatown neighborhood.

“It is their full intention to operate as a safety net hospital,” said Insight attorney Juan Morado, Jr. He added that Insight’s purchase was “never contingent on any kind of government bailout. It’s always been their intention to invest in increasing services and infrastructure of the building.”

Representatives for Lightfoot have declined WBEZ’s interview requests for more details.

But her move is unique considering the state regulates hospitals – not the city – and Lightfoot has been relatively quiet about Mercy’s near closure.

The city’s efforts for a new deal with Insight came as the company took over Mercy on Tuesday. Executives are now hustling to resuscitate a hospital whose previous owner, Trinity Health, had been winding down for months.

Mercy announced plans to close in July, saying the hospital for years had been losing patients and the money they generated. This has been a national trend as medicine advances and patients seek out health care options that are cheaper than expensive hospitals. But in Chicago it sparked fierce backlash from many community organizers, Mercy employees, lawmakers and even regulators who questioned closing a safety net hospital – particularly during the COVID-19 pandemic.

Mercy had one of the busiest emergency departments in Chicago, and it was one of the few places where women could deliver a baby on the South Side.

Still, the hospital filed for bankruptcy in February and was preparing to close by laying off employees, shutting down medical units and transferring out patients. This continued even after announcing a deal with Insight to buy Mercy for $1.

Lightfoot negotiates new hospital deal

Even though it was just announced, the agreement Lightfoot’s administration cut with Insight Chicago already is causing controversy – especially with one local alderman.

Chicago is filled with special TIF districts, which pull property tax revenue from buildings within a certain boundary to fund redevelopment efforts in blighted areas. It’s a controversial program that’s been accused of misuse, particularly under Mayor Richard M. Daley, due to the number of TIF districts created in Chicago’s prosperous downtown. More recently, the city has used TIFs to incentivize specific development projects, like Lincoln Yards on the North Side.

There’s a TIF district around Insight Hospital & Medical Center that’s meant to improve streets and sewer systems and create affordable housing, parking and jobs, according to the city.

As a condition of getting TIF money, Chicago had a redevelopment agreement with Mercy that stipulated several benefits for the surrounding community, including that the hospital would remain open through 2029.

With Insight taking over, the mayor’s office had two options, Morado said: End the existing agreement or transfer it to Insight. The city decided to terminate the previous agreement, but hasn’t answered WBEZ’s question about why.

But in a termination agreement signed on May 28 by Maurice Cox, commissioner of Chicago’s planning and development department, and then-Mercy CEO Carol Schneider, the city said the agreement with Mercy dating back to 2006 requires Mercy to “continue to provide its full mission in patient care and education and research in support of community benefit.” Because Mercy had ended its teaching program as it prepared to close, the hospital was in default, so the city agreed to terminate the agreement instead of transferring it to Insight, according to the document.

If Insight took over without the city’s blessing, Morado said Lightfoot could have sued both Mercy and Insight for running afoul of the earlier agreement, and could have sought to change who owned the hospital.

“That effectively would have shut down the hospital yesterday,” Morado said.

The new agreement Lightfoot helped negotiate, which includes the list of requirements for Insight, is between Trinity and Insight, but it gives Lightfoot the power to enforce it, Morado said.

It’s not clear how the city plans to use the TIF district going forward since it encompasses the hospital. Representatives with Lightfoot wouldn’t say.

Ald. Sophia King, whose ward includes the hospital and who fought to prevent it from closing, questions whether it was legal for Lightfoot – and not the City Council – to have terminated Mercy’s redevelopment agreement. She provided WBEZ with a legal opinion from the City Council Legislative Reference Bureau she received that says it’s unlikely the termination would be effective without City Council approval or ratification.

“It is extremely disturbing that the Mayor would even seek to terminate a redevelopment agreement – the very tool that protects community benefits,” King told WBEZ. “This sets a bad precedent.”

King wanted to vet other buyers when Insight was in negotiations with Trinity to purchase Mercy. She’s called for more transparency around financials and plans for the hospital from Insight.

Kristen Schorsch covers public health on WBEZ’s government and politics desk. Follow her @kschorsch. WBEZ city government reporter Mariah Woelfel contributed.