After months of bankruptcy hearings, biddings, and uncertainty toward the future of Mercy Iowa City, signage crews unveiled the hospital’s new look on Wednesday as the University of Iowa Health Care Medical Center Downtown.
A bankruptcy judge approved Mercy’s sale on Nov. 6 with a final bid of roughly $28 million. The bid also included commitments of $25 million for facility upgrades, $23 million for salaries and benefits of the Mercy staff moving to UIHC.
Denise Jamieson, UI Health Care vice president for medical affairs and dean of the Carver College of Medicine, said the primary focus in the coming weeks is to welcome new colleagues and ensure that patients continue to have access to existing services.
“The overall reaction from the community has been really positive and everyone really appreciates the fact that we will continue as a health care entity,” Jamieson said.
A crew of three to four people from Latitude Signage and Design arrived around 9:35 a.m. on Wednesday to replace the signs, changing them in about 20 minutes. One crew member also replaced the Mercy decals on the doors.
Jamieson said there are no plans for changing or extending the facilities at the new hospital, although the exact strategy is still unknown.
She said the hospital’s previous connection to Sisters of Mercy will no longer continue. The Sisters of Mercy established the hospital in 1873, making it the first hospital in Iowa City.
“We are really trying to continue the spirit of hospitality that was so important to this campus for so many decades,” Jamieson said.
She also said the existing Catholic chapel will be made an interdenominational chapel and space for reflection.
Looking ahead
Jamieson said there will be no disruption in ambulatory practices and there are advantages to being a part of a system rather than one independent facility as strategic decisions can be made on what services can be offered at each of the hospitals.
The UI’s bid to acquire the hospital was a commitment to providing funding to update the hospital’s infrastructure and systems. Jamieson said on Wednesday that the immediate updates to be done will focus on changing the electronic medical records system and updates to a parking ramp.
For the electronic medical record system specifically, Jamieson said the downtown campus uses Altera but will transition to Epic in the spring, the system UI Health Care currently uses.
Jamieson said having each staff use the same system will make everyone comfortable, and when news of the transition to Epic was made to the Mercy staff, it was received with applause.
During an Iowa Board of Regents meeting on Jan. 28, UI officials said that UI Health Care and Mercy Iowa City would begin operating as one system on Jan. 31.
The hospitals will each maintain its staff, and the downtown campus hospital will transition its roughly 1,000 staff from Mercy. Jamieson said employees will have the same benefits and opportunities provided by the university system going forward.
Although the staff will be separate, there may be potential overlap in the future. Jamieson said staff at the main hospital could practice at the downtown campus, and vice versa.
Jamieson also said patients will be able to select where they want to receive care and that it will be a coordinated scheduling process.
There will also be opportunities for students studying at the UI to intern at the new hospital.
“We would expect there to be opportunities in the future,” she said. “What those opportunities look like, I think it’s too soon to tell.”
Joseph Clamon, UIHC associate vice president for legal affairs, said at the Jan. 28 regents meeting that staff members employed at Mercy will not require faculty appointments through the Carver College of Medicine. Staff at the UI’s main hospital will continue to require a faculty appointment.
A series of proposed bylaws were presented to the regents at the meeting, which the regents unanimously approved.
Clamon said each hospital will have its own set of bylaws and will maintain the four existing departments: Surgery, Maternal and Child Health, Family Medicine, and Emergency Medicine.
A transition realized
Wednesday’s transition is the final step in a process spanning from last summer until now. It started after creditors and investors of Mercy took the hospital to court to place it in a receivership.
The reasoning, the plaintiffs wrote, was that Mercy had been going through a period of cash burn, the hospital’s liquidity having gone down $42 million by the time of the receivership request.
Mercy filed to dismiss the request and made a similar request in August before it ultimately filed for bankruptcy on Aug. 7. The UI quickly followed that up by announcing its intention to buy the hospital, with both parties submitting a letter of intent.
Both then submitted an agreement to the U.S. Bankruptcy Court in the Northern District of Iowa, with an end date of November to finalize the sale. If the sale was completed, the UI would receive all Mercy assets, including real estate and employees.
In September, the UI submitted the opening $20 million bid, or “stalking horse bid,” for Mercy which set the floor price of the auction. If no competing bids were made by Oct. 2, the UI would be declared the automatic winner.
However, an opposing bid was entered on the deadline day of the auction, leading to an auction between the UI and its then-unknown competitor.
On Oct. 10, Preston Hollow Community Capital was revealed as the UI’s competitor when it was made the auction winner. Preston Hollow was one of Mercy’s bondholders who was involved in the lawsuit to place Mercy in a receivership.
But in a surprise twist 17 days later, the UI was named as the auction winner after the results were changed. According to court documents, the change was due to a disagreement where Preston Hollow refused to pay for Mercy’s debts.
With the UI picked as the auction winner, it would now have to wait until November to learn if a bankruptcy judge would approve the sale. And on Nov. 6 it was, with Mercy and the UI making a joint statement outlining the next steps for the acquisition process.
