The deal is finally done. On Monday, the judge overseeing the bankruptcy of Mercy Iowa City approved its sale to the University of Iowa. But the judge’s approval, which was needed for any deal to purchase Mercy’s assets, doesn’t mean all the details of the deal are in place just yet.
“Mercy attorneys during a relatively brief hearing that left many issues unresolved — including some related to the hospital’s waning cash resources — said court approval of the sale marked a ‘banner day’ for Mercy,” Vanessa Miller reported at the Gazette.
In a joint statement issued on Monday afternoon, UI President Barbara Wilson, UI Vice President for Medical Affairs Denise Jamieson, Mercy president and CEO Tom Clancy and Mark Toney, the chief restructuring officer for Mercy, said they “appreciate [the] past and continuing support” of their employees, providers and the community.
“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 said.
UI did not enter the highest bid for Mercy in last month’s bankruptcy auction. Its bid of $28 million was surpassed by a $29 million bid from Preston Hollow Community Capital, a Texas-based firm and one of Mercy’s largest creditors. At the time, Mercy declared Preston Hollow the winner of the auction, calling its bid the “highest and otherwise best bid.” A week later, Preston Hollow filed paperwork with the court saying negotiations over the terms of the sale agreement were at an impasse, because of differing definitions of the term “operating losses.”
On Oct. 27, Mercy said the impasse with Preston Hollow left UI’s bid as the winning bid, pending approval of the bankruptcy court.
In the joint statement on Monday, the UI and Mercy leader promised to “preserve and enhance access to quality health care and jobs for those throughout our region,” and advised Mercy Iowa City patients to “continue to schedule and go to your appointments as usual.”
The statement lays out some of the initial steps of the UI takeover of Mercy, according to the leaders.
• The university has committed that all Mercy Iowa City employees in good standing will be offered employment with UI Health Care.
• Community providers not employed by UI Health Care may continue to practice at the facility under an open medical staff model.
• We are beginning to plan for our organizations to officially join as one in early 2024. In the meantime, there will be no immediate changes for patients, employees, or physicians.
When Preston Hollow was still considered the winning bidder, the sale was scheduled to be finalized by the end of February 2024. The statement released on Monday did not include any information about when the new sales agreement will be finalized.
With the acquisition of Mercy, the University of Iowa will become the only hospital system in the Iowa City area.
