Community hospitals ensure affordable, accessible health care

Mercy Iowa City Hospital filed for Chapter 11 bankruptcy in federal bankruptcy court in August. Chapter 11 filings, are usually considered reorganization filings where the bankruptcy court discharges the debt, and the debtor emerges with a plan to continue operations. Because of this, most assumed it was a reorganization filing. However, it was an asset sale filing, in which the offer from the University of Iowa Hospitals and Clinics (UIHC) for Mercy’s assets would have resulted in a new UIHC hospital where Mercy stood for 150 years. If that sale occurred, UIHC would have been the only provider of hospital services in Johnson County — except for the VA hospital, which only serves military veterans. 

Fortunately for our community, Mercy’s primary secured debt holder, Preston Hollow Community Capital (PHCC), outbid UIHC and has committed to maintaining an Iowa-based, nonprofit hospital in Mercy’s place. The threat of losing Mercy has raised critical questions about maintaining an authentic community hospital in Johnson County. In turn, answers to the questions reveal the significance of supporting the new nonprofit hospital opening in the next few weeks. Our community must recognize the need for a second option to maintain competitive health care pricing and access through a diverse community health care landscape. 

Consider the role of community hospitals throughout Iowa; they are essential to health care access for Iowans. They are deeply intertwined with the fabric of their local communities, providing critical services and personalized care to residents and serving as a safety net for those who may not have access to more specialized facilities.  

Community hospitals are also known for being cost-effective and providing competitive health care pricing. This is crucial for Iowans, who often lack comprehensive health insurance coverage. These hospitals are deeply rooted in and committed to their communities. They often engage in health education and outreach programs, providing preventive care and supporting public health initiatives. Community hospitals are adept at handling non-complex cases and minor emergencies, meaning they help alleviate the burden on larger, specialized hospitals, like UIHC, which can focus on more critical cases for which they charge more than community hospitals and are paid more than community hospitals. Academic hospitals usually have different pricing structures influenced by research and teaching priorities and associated costs supporting their mission. 

The absence of a community hospital in our community would create a void that academic and research institutions, like UIHC, are ill-equipped to fill. UIHC, while a renowned academic and research facility, operates with a different mission and focus. It primarily serves the needs of medical research and teaching, making it less conducive to providing community health care. Had UIHC won the auction for Mercy’s assets, it would be the only option in our community. In any robust healthcare system, having multiple health care access and treatment options is crucial to maintaining competitive pricing and ensuring access to quality care. The absence of a community hospital would negatively impact health care pricing and affordability for our community. 

With its century and a half of service, Mercy Hospital embodied the values and importance of a community hospital, ensuring affordable and accessible health care. 

Preston Hollow Community Capital’s commitment to establishing a new Iowa-registered nonprofit hospital in the place of Mercy Iowa City cannot be understated. PHCC’s financial strength and commitment to support the new hospital is a commitment to our community. Establishing a new nonprofit hospital, with a local board committed to tailoring healthcare services to the specific needs of our community, ensures the continuity of genuine community healthcare services in Iowa City. The nonprofit status of the planned new hospital reflects a commitment to putting the community’s health care needs above profit margins. It demonstrates a dedication to providing accessible and affordable health care to the residents of Iowa City. 

In our community, Mercy, for many years, represented everything I described, and our community benefited through Mercy’s mission and presence. When no one else would, Preston Hollow offered to preserve a genuine community hospital in our community.

Patrick Magallanes is president and CEO of Steindler Orthopedic Clinic.