Mercy Hospital, the 159-year-old hospital at 2525 S. Michigan Ave. on the Near South Side, where former Mayor Daley was born, has entered into formal negotiations to merge with a Michigan-based hospital system.

Mercy’s suitor is Trinity Health, a Novi, Mich.-based Catholic hospital system that recently bought another large hospital system in Chicago, Loyola University’s network of teaching hospitals.

Though the two organizations have been in discussions for some time, the announcement indicates that serious negotiations are beginning. A letter of intent has been signed, they said in a joint press release Thursday afternoon, that sets the framework for creating a joint operating model for the two organizations.

Mercy’s CEO, Sister Sheila Lyne, said that while the hospital has rebounded in recent years, it could use the support system that Trinity offers.

“While we stand strong today, we realize that with the uncertainties of health care reform and the challenges facing stand-alone hospitals, we need to be responsible and consider an affiliation with a larger Catholic health system,” Lyne said. “Joining our ministry of healing with Trinity Health would provide us with the strong base of support needed to ensure we can continue to serve our community.”

If things go as planned, the two could merge by spring of 2012, according to the press release.