The former palace of the Gosiewski family - later the convent of the Sisters of Mercy, who ran a hospital in it - is one of the more mysterious buildings of old Vilnius. Situated on the edge of the Old Town, the edifice and its courtyard offer a beautiful view of the Vileyka and Užupis rivers.

The palace of the Gosiewski family of Korvin coat of arms was located in the oldest part of Vilnius, where Russian settlements predominated, hence it was called "civitas Ruthenica" (Ruthenian city). Archaeologists have found burials dating back to the 14th to 15th centuries on the plot of land where the Smolensk voivode Alexander Gosievsky (died 1639) had built his palace.

The Gosevskis' residence was located in the midst of bourgeois houses, right next to the Orthodox Church of the Most Pure Mother of God and the seat of the metropolitan, as well as the unpreserved Church of the Saviour. The shape of the plot of land was irregular, as it sloped down into the valley of the Vileyka River, directly towards the Spasskaya Gate, behind which stretched the Zarzecze. The two-storey, basement palace of the Gosiewski family had a U-shaped ground plan and was located on an east-west axis.

Aleksander Gosiewski was inherited by his son, Wincenty Aleksander, field hetman of Lithuania, who was assassinated in 1662 by a confederate army. After his death, renovation work on the palace was undertaken by his widow Magdalena, née Konopacka (d. 1694). In 1690 the palace belonged to Jozef Boguslaw Sluszko (d. 1701), whose wife from 1677 was the elder of the Hetman's daughters, Teresa (d. 1708), one of the most colourful characters of the last quarter of the 17th century, on whose part the town of Terespol was founded.

After the death of Słuszko, who also held the minor mace, Teresa (née Gosiewska) married her long-time lover, Kazimierz Jan Sapieha, in 1703. Her will, written down on 6 June 1708, shows that both she and her second husband, having no offspring of their own - together - wanted to convert the old Gosiewski palace into a hospital.

The seat was then taken over by Teresa's brother, the future Bishop of Smolensk, Boguslav Gosievsky (1660-1744), who, following his sister's wishes, founded the hospital in 1744. Educated by missionaries in Warsaw, he supported the congregations founded by St Vincent a Paulo, so it was clear that the hospital would be run by the Sisters of Charity (the Grey Nuns), and the foundation would be looked after by missionaries with a convent nearby on Mons Salvatoris.

The Grey Nuns succeeded in enlarging the area of the Gosiewski family's original site, either through purchases or by obtaining donations. These included plots of land along the street with buildings dating back to the 16th century. They also rebuilt the palace for hospital purposes. A two-storey high public chapel was organised on the street side. The convent of the Sisters of Mercy occupied a separate building in the north-eastern part of the site. The outbuilding standing in the middle of the plot, enclosing the first courtyard, has also survived from the former palace building. During the conversion of the palace complex into a hospital in the mid-18th century, an arcaded arcade was added in the ground floor. The area of the acquired plots bounded by the palace and the outbuildings was connected by a wall with a decorative gate (after the mid-18th century).

The hospital and its buildings underwent reconstructions in 1863-1864 and in 1868 (removal of the chapel and division of its interior into storeys) according to the design of Ivan Levytsky (1830- after 1894). Another reconstruction took place in 1875, supervised by Alexei Polozov (1820-1903). In 1803, Tsar Alexander I visited the hospital. From that year onwards, medical students of the former Vilnius Academy practised there. The palace retained its hospital function until 1999. Between 2013 and 2020, the entire complex of former buildings was renovated and transformed into flats including a spa, a restaurant and a concert hall according to a design by Antanas Gvildys of the Archinova studio.