Mercy Iowa City to exit affiliation with statewide MercyOne network

Mercy Iowa City officials said the hospital will leave its affiliation with the statewide MercyOne health network.

Mercy Iowa City’s board of trustees instead has opted to align with a larger organization “that can fully integrate Mercy Iowa City” by offering broader access to infrastructure services, better purchasing power and overall greater clinical and operational support in the long-term, according to an internal memo obtained by The Gazette.

The memo was sent to hospital staff Wednesday.

MercyOne will remain the managing partner as Mercy Iowa City searches for a new affiliate partner.

“We are an independent hospital and given the market dynamics as well as challenges from the health care industry, we need to integrate much more closely with a larger health system so we can achieve economies of scale aligning with our long-term goals,” Mercy Iowa City spokesman Aaron Scheinblum said in a statement.

The hospital board reached this decision in partnership with MercyOne, which came following “the impact of their historical operating challenges, the impact of the pandemic and the changing health care dynamics in the market,” according to a MercyOne statement to The Gazette.

“At this time, MercyOne simply cannot provide that level of integration because we are in the midst of more fully aligning our internal structure,” MercyOne officials said in a statement.

The Catholic health network, headquartered in West Des Moines, has been the Iowa City hospital’s managing partner since June 1, 2017.

At the time Mercy Iowa City signed the strategic affiliation agreement, officials said the partnership would strengthen the hospital’s “financial performance even more by providing access to critical benefits such as payer contracting, group purchasing and economies of scale, access to systems that already exist within the network and strategic growth opportunities.”

Mercy Iowa City signed the agreement after months of negotiations with the UnityPoint Health network fell through in 2017.

The hospital’s board of directors has hired a third-party adviser to review prospective partners, officials shared in the internal memo.

Mercy Iowa City officials did not include further details on the third-party adviser or on the organizations they are considering as prospective partners.

“Our goal in this process is to maintain the Catholic ministry of compassionate care started by the Sisters of Mercy almost 150 years ago — and this goal is more important today than ever,” Mercy Iowa City board of trustees wrote in the internal memo.

“However, to continue to serve in this manner and embrace the private practice of medicine in Iowa City and surrounding communities, we must look for a new partner where there are expanded integration opportunities for our ministry.”

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