The University of Iowa Hospitals & Clinics (UIHC) has a tagline on its website that states: “As a university-based medical center, we’re more than a community hospital.”
The idea of a community hospital, unfortunately, has been taken for granted for too long in Iowa City, because things are about to fundamentally change if the bankruptcy court approves the University of Iowa’s acquisition of Mercy Iowa City for $20 million.
There are stark differences between an academic medical center (AMC), e.g, the UIHC, and a community health center or community hospital, e.g, Mercy Iowa City.
Health care leaders up and down the Corridor region have been trying to get the public to pay attention to these differences, as well as the disturbing encroachment of a state institution into obvious competition with private enterprise.
Regarding costs, a July 2021 paper published by the George Washington School of Business plainly states that AMCs have above-average costs for care due to the disproportionate share of uncompensated services they deliver and their staffing requirements. Many AMCs have historically charged privately insured patients more than other facilities, in part to cover these high overall operating costs.
Make no mistake, we want the UIHC to be wildly successful. Its success is key to our region’s success and identity. We just don’t want Iowa City to lose its community hospital and the competition it provides.
Competition is good for patients and the overall marketplace. It helps keep costs down and forces organizations to be more effective and efficient.
If this acquisition proceeds successfully, it is not because the UIHC is greedy or manipulative, it is because the leaders of Mercy Iowa City have completely and utterly failed to adjust to a changing and ultra-competitive health care landscape for far too long.
What we know is that Mercy Iowa City failed to protect and expand into growing communities in and around Johnson County, while watching other private and public health care providers aggressively do just that.
We know that Mercy Iowa City failed to connect itself with another health care system while the economics of being an independent provider were clearly unsustainable.
We know from reporting by The Gazette that UI Health Care offered in 2021 a $650 million package to take ownership and make Mercy the “centerpiece” of a new UIHC “community division,” but that plan never materialized.
Now the UI is proposing a $20 million purchase price for Mercy’s operating facilities and key assets without an obligation to repay $63 million of publicly-issued bond debt that Mercy currently owes. It has the potential to be a remarkably positive outcome for the UIHC.
It’s too early to determine where this will end up. Will the bankruptcy acquisition be successful? What will happen to the pensions of Mercy employees and retirees? Will the UIHC be able to implement a truly effective community hospital model? Will another private enterprise try to fill the community hospital void in Johnson County? Regardless, the loss of Mercy Iowa City as an important and vital institution is nothing but a shame.
