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University of Iowa Health Care’s acquisition of Mercy Iowa City will quickly move to bankruptcy court following a unanimous vote by the state Board of Regents Tuesday to approve the university’s $20 million bid.
UIHC and Mercy will file an agreement with the U.S. Bankruptcy Court in the Northern District of Iowa for approval and aims to finalize the deal in November. Mercy Iowa City voluntarily entered a petition for reorganization, more commonly known as bankruptcy, on Monday morning.
The filing comes after two investors, Preston Hollow Community Capital and Computershare Corporate Trust, petitioned Mercy Iowa City to enter into a receivership because of its poor financial state. Mercy Iowa City filed a motion Aug. 4 to ask the judge to dismiss the petition.
During the regent’s special session on Tuesday, UI President Barbra Wilson asked the board to accept the proposed bid agreement for the acquisition of Mercy Iowa City in the interest of the delicate medical ecosystem in Iowa.
“We have an aging population, we have more and more complex needs among our patients, and a shortage of physicians,” Wilson said Tuesday morning. “We, as the University of Iowa, remain committed to our mission of care for all citizens of the state.”
Denise Jamieson, UI vice president for Medical Affairs and dean of Carver College of Medicine, said the UI needs to continue to provide patient care to the Iowa City community during the bankruptcy filings.
“We know that this bankruptcy proceeding is very complex, and it’s going to take some time to play out in court,” Jamieson said. “We still have many unanswered questions, but at the same time, we’re very confident that if approved by the bankruptcy court to move forward, that affiliation between University of Iowa Health Care with Mercy Iowa City would really be in the best interests of our patients and the community.”
RELATED: UI requests $20 million acquisition of Mercy Iowa City
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.
The bid now requires approval from the federal bankruptcy court in the Northern District of Iowa, with a hearing scheduled for 11 a.m. on Tuesday in Cedar Rapids.
The acquisition 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.
UIHC offered to purchase Mercy Iowa City in 2021 for $605 million, according to an investigation by The Cedar Rapids Gazette. The offer was part of a proposed expansion by UIHC, hoping to make Mercy Iowa City a “community division” of UI Health Care.
Alejandro Rojas contributed to this report.
