The University of Iowa’s acquisition of Mercy Iowa City was approved by the bankruptcy court Monday morning.
The sale’s approval closes a prolonged saga in which the UI originally lost the auction to Preston Hollow Community Capital, only to be declared the winner 17 days later.
In a statement to UI employees, the UI wrote that both it and Mercy had been serving the Iowa City community for 150 years, and the sale comes at a time when hospitals nationwide are struggling with 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.”
The statement outlined the next steps for both entities with the sale. This includes a commitment from the UI that all Mercy employees would be in good standing and would retain their jobs under the new ownership.
The UI also committed to allowing community providers to continue practicing at the hospital under an “open medical staff model.” This commitment comes after Steindler Orthopedic Clinic, one of Mercy’s many partners, filed an objection with the court over the then-pending sale on Nov. 3.
The remaining two steps or commitments were directed more to the patients and the community who utilize Mercy’s services. In those commitments, the UI wrote that the two organizations would officially combine in 2024, but that there would be no changes to service for patients, employees, or physicians.
The last commitment emphasized that people currently receiving treatment or services from Mercy should continue scheduling and attending appointments as usual.
Prolonged acquisition process
Monday’s approval of the sale comes after a months-long discussion, beginning when Mercy filed for bankruptcy in July.
A month later in August, the UI requested that the state Board of Regents approve a $28 million bid to acquire the hospital. The regents subsequently met on Aug. 8 to discuss the request, unanimously approving it, and moving the process to bankruptcy court.
The UI then submitted a “stalking horse bid” of $20 million, setting the floor price for the auction which had an Oct. 2 deadline for bid submission. As the deadline approached, Preston Hollow Community Capital submitted its own bid, setting the stage for an auction to take place in Chicago.
On Oct. 10, nearly three months after the whole process had started, Mercy selected Preston Hollow as the auction winner, but changed course 17 days later, declaring the UI the winner on Oct. 17.
Around this time, the final, winning bid from the UI was revealed to have been worth $28 million, with an additional $25 million commitment for facility upgrades and $23 million for salaries and benefits of Mercy employees.