University of Iowa’s acquisition of Mercy Iowa City was approved by bankruptcy court on Monday, Nov. 6. The University of Iowa released a statement shortly after the approved sale, expressing its satisfaction with the outcome and reiterating its shared goals with Mercy of providing for the community’s health care needs in an accessible and affordable […]
University of Iowa’s acquisition of Mercy Iowa City was approved by bankruptcy court on Monday, Nov. 6.The University of Iowa released a statement shortly after the approved sale, expressing its satisfaction with the outcome and reiterating its shared goals with Mercy of providing for the community’s health care needs in an accessible and affordable way.“At a time when many hospitals nationwide are experiencing significant financial challenges, we are heartened to begin the planning to bring Mercy Iowa City into UI Health Care,” the statement read. “Together, we will preserve and enhance access to quality health care and jobs for those throughout our region.”UI outlined some immediate steps that will be taken, directly following the sale. Current Mercy employees in “good standing” will have the option to continue their employment with UI with a formal offer. Another step is to offer an “open medical staff model” for non-UI community providers to continue practicing within the facility, a decision that comes after Steindler Orthopedic filed a Nov. 3 objection in response to the prospect that its contracts with Mercy could be assigned to University of Iowa Health Care.UI ‘s statement indicated it will officially merge with Mercy in early 2024, and assured community members that no immediate change will occur for patients, employees and physicians. In the meantime, current patients can schedule and attend appointments as usual.“Although many details are yet to be determined, our teams are dedicated to finding solutions through collaboration and providing regular updates,” the statement read.
Bondholders blindsided
The sale approval came shortly after Mercy reversed its decision to accept bond investor Preston Hollow Community Capital’s bid for $29 million, $9 million more than UI’s original bid. Following the initial sale to Preston Hollow, an impasse occurred in which Mercy would not schedule a hearing to approve the sale of the hospital. The sticking point was the timing of closing dates. “Because the University had begun numerous workstreams relating to transition and potential closing issues, the University had the ability to close the transaction as soon as November 30, 2023,” a court motion filed Nov. 5 stated. “In contrast, if (Preston Hollow) were to be selected as the winning bidder, it was likely that their transaction would not be in a position to close until, at a minimum, several months thereafter. This was critical because, on average, (Mercy’s) operational burn is approximately $1 million per week, and because (Mercy’s) liquidity would run out prior to the end of November 2023.”
