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University of Iowa Health Care may acquire Mercy Iowa City’s employees, services, and key assets through a $20 million request to purchase the hospital as it faces bankruptcy.
The state Board of Regents will convene Tuesday to consider the approval of the purchase of the hospital. Mercy Iowa City and the state of Iowa signed a letter of intent to merge the two organizations and preserve access to health care in Iowa City. The UI offered $605 million to purchase Mercy in 2021 to act as a new secondary care facility.
UI Health Care would acquire Mercy’s real estate, employees, equipment and supplies, and active business operations with the purchase, according to the regent’s agenda. Under the contract, the UI would not assume or be obligated to pay back Mercy’s debt, expense, or liability of the hospital.
“Faculty appointment will not be required to be or remain on the medical staff at the hospital,” according to the regent’s agenda.
UI President Barbara Wilson and Denise Jamieson, the recently hired vice president for medical affairs and dean of Carver College of Medicine, said in a statement Monday that Mercy Iowa City will continue its operations during the business transaction.
“Although many decisions will be in the hands of the bankruptcy court, we share a goal to preserve and enhance local and regional access to quality health care and jobs,” Wilson and Jamieson said.
Mercy Iowa City is currently in court after two of its investors, Preston Hollow Community Capital and Computershare Corporate Trust, made a push for the hospital to be placed in a court-appointed receivership — which would remove ownership of the facility from Mercy health systems. Attorneys for the hospital filed a motion for the judge to dismiss the case, for a second time on Aug. 4, following the petition by the private equity company on July 24.
Preston Hollow Community Capital wrote in a statement on Monday alleging that the hospital’s filing is the result of years of financial mismanagement.
“Even now, after years of inaction on their part, the hospital chooses to point fingers at others rather than take any accountability for their financial losses or demonstrate any willingness to seriously address the factors that led to those losses,” the statement read.
The acquisition also comes two years after the regents approved a plan for a new $395 million UIHC hospital in North Liberty, Iowa. The construction of the hospital, which is slated to be completed in June 2025, will feature inpatient beds, operating rooms, an academic section with outpatient clinics and education, among other things.