PITTSBURGH -- A letter of intent has been signed to transfer ownership of Mercy Hospital to the University of Pittsburgh Medical Center.

According to a news release from Pittsburgh Mercy Health System, the 428-bed facility will remain a Catholic hospital, as it has for more than 100 years.

UPMC will operate Mercy as an acute care hospital called UPMC Mercy, with plans to make necessary financial investments, the statement said.

More: Read The Entire Statement From Pittsburgh Mercy Health System

Mercy's history dates back nearly 160 years. It opened on Jan. 1, 1847, as the first hospital in Pittsburgh founded by the Sisters of Mercy.

"I was very shocked," employee Elizabeth Baker said. "We had heard a lot of rumors for quite a long time, and we were just shocked to finally hear the news today."

John McGinley Jr., chairman of PMHS' board of trustees, said Mercy Hospital and Mercy Primary Care had total operating losses of $42 million in the last three years -- a trend he called "unsustainable."

"We explained our desire to make sure that our patients were treated in the first-class way that they have come to expect, that our employees needed to have their job security provided for," he said.

Sister Margaret Hannan, president of the Sisters of Mercy, said the deal "is the best possible way to preserve the hospital as a community resource, to ensure the jobs of our employees, and to preserve the Catholic designation of the hospital."

UPMC and Mercy said the hospital's transfer of ownership won't mean cuts in services, jobs, charity or quality of care, but it will mean millions of dollars available for an improved emergency room, intensive care unit and other facilities.

"Any institution that we've taken into our system has grown and expanded and prospered, and I expect fully that that's going to happen right here," said Robert Cindrich, UPMC's chief legal counsel.

Other Pittsburgh Mercy Health System facilities are not covered in the deal.

News of the big change was emotional for some longtime employees.

"It's just heartbreaking," Cathy Olson said. "I never thought that it would ever happen. The Sisters have been here for over 150 years."

The Sisters of Mercy will net $120 million, which will fund their foundation to provide community-based services for the poor, the elderly and others.

"In a way, it frees us to really concentrate on the mission. It's a sad day, but also a very exciting time," said Hannan.

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