Steindler Orthopedic has joined Mercy Iowa City’s bondholders and master trustees in a call to resolve the current impasse with the court case, urging Mercy to agree to finalize the sale date. “Despite concluding the auction over two weeks ago, (Mercy) has not sought to schedule a hearing seeking entry of a court order approving […]
Steindler Orthopedic has joined Mercy Iowa City’s bondholders and master trustees in a call to resolve the current impasse with the court case, urging Mercy to agree to finalize the sale date. “Despite concluding the auction over two weeks ago, (Mercy) has not sought to schedule a hearing seeking entry of a court order approving the sale of the operational hospital assets to PHCC (Preston Hollow Community Capital),” a court document stated, which puts Steindler Orthopedics’s daily operations into jeopardy.
Currently, Steindler co-manages the day-to-day orthopedic surgical services for Mercy's patients.
Losing staff and money
The court document, filed on Oct. 25, says that Steindler's patients have canceled or postponed their surgeries as a result of the continuing uncertainty concerning Mercy's future.Steindler listed multiple ways in which the hospital has been negatively impacted by the delay in court proceedings, including retention of health care professionals and staff, patient care continuity, a decline in confidence from both the community and stakeholders, risks posed from the transaction delay and additional accrued expenses.“Retention of staff and healthcare professionals is vital for the future of a community hospital and its viability,” the motion stated, saying that Steindler “is aware” of several healthcare professionals leaving for more stable employment, citing the uncertainty of Mercy’s current status.The departure of staff has negatively impacted ongoing patient care and services, causing doubt about Mercy’s ability to effectively treat community members. “Delaying the finalization of the sale is significantly eroding the confidence that the remaining hospital staff, professionals, and community members have that the hospital will remain a viable healthcare option for the Iowa City community in the future,” said the motion. Steindler also pointed out that PHCC should, by now, be making decisions about staff hiring, payer contracting, regulatory approvals and “other matters that are attendant to a transfer of ownership and operation of a community hospital” which are all on hold until the sale officially closes.Lawyer fees are piling up in the meantime, money that could be utilized for hospital operations.
Foundation funds not included
Mercy hit an “impasse” with the sale of its hospital and assets last week, an issue its buyers say is due to conflicting ideas on the use of funds from the hospital’s philanthropic foundation.A motion filed by Preston Hollow Community Capital and Computershare Trust Company indicated that following the sale, the hospital’s foundation would contribute all its unrestricted funds to operating expenses, also known as its “losses.” In the last week of September, the foundation had already contributed $2,200,000 to the hospital for operating expenses.After the auction was over, however, Mercy indicated that it would not include any foundation funds when calculating “operating losses” for the Bondholder Representative's backup responsibility.On Oct. 17, Mercy supplied winning bidder Preston Hollow with a draft operating budget, indicating that the foundation funds would not be applicable moving forward – leaving estate professional fees of $3.5 million and $15 million in operating losses.“At no point during the auction did (Mercy) propose that the term “operating losses” meant anything other than its common understanding and usage, which is simply the amount by which the hospital’s operating expenses exceed its available funds to pay such expenses,” a court motion stated. “(Mercy) did not define it otherwise or suggest in any manner that the term “operating losses” was subject to any specialized or bespoke meaning or formulation.”Mercy argues that these funds should not be included when calculating operating losses, that the term “operating losses” was used more in a theoretical way.
