Mercy Iowa City suspends trio of benefit programs given ‘limited resources’

IOWA CITY — Although Mercy Iowa City two weeks ago told participants of its 55-year-old pension plan that they will, for now, “continue to receive your monthly pension checks,” hospital leaders Thursday announced the temporary but immediate suspension of three other employee benefit programs.

Mercy’s service awards program will be suspended until further notice, according to an email Thursday from President and Chief Executive Officer Tom Clancy, advising employees to “redeem any unused points” accrued through the program by Sept. 27.

Its wellness assessments program also is suspended, along with cash participation incentives, although the hospital will provide flu shots this fall to employees for free.

And Mercy’s “temporary assistance program” — offering employees emergency financial aid through a confidential program for crisis and health benefit assistance — has been suspended, too.

Mercy hasn’t reported an updated number of the employees it has. At the time it filed for Chapter 11 bankruptcy protection in early August, the hospital was reporting a workforce of 1,122 employees and more than 90 physicians.

Acknowledging Mercy’s bankruptcy petition and a public proposal to sell its assets to the University of Iowa for an opening offer of $20 million, Clancy said in his email, “We hope that our new partner will see the value in the programs, and we will reinstate or increase benefits with better programs.”

In an Aug. 17 letter to participants of its pension program — which is underfunded by about $23 million — Mercy reported the bankruptcy could affect the “disposition of the plan.”

“But this is not certain,” according to the letter. “Mercy Iowa City continues to pursue various options for long-term solutions for the plan. During this period, you will continue to receive your monthly pension checks.”

Eligible participants also can continue applying for benefits of the plan, which holds assets in a trust that can be used only for participants and beneficiaries.

A bankruptcy judge earlier this month authorized, but did not order, Mercy — on an interim basis — to keep paying employees and honoring worker benefit, compensation, claim, tax and retirement obligations “in their sole discretion.” Mercy, however, reserved its rights to change or terminate any employee plan or program or change or terminate obligations “as necessary or prudent,” according to the order.

“All of this news piled on our regular daily lives can be emotional for each of us,” Clancy wrote in his email Thursday. “Some team members are experiencing a variety of concerns including personal financial stability, difficulty adapting to the rapid and pending changes, and sadness and attachment to the old organization.”

Mercy announced Thursday it has asked the Synchrony Employee Assistance Program to provide support “during this time of change and uncertainty.” The organization is offering trained therapists to Mercy Iowa City employees, at no cost to the employees, to help work through “these feelings.”

Although Mercy hasn’t reported publicly how much it’s paying Synchrony for those services, attorneys in August reported the hospital owes Iowa City-based Synchrony Services $857 for its “employee assistance program.”

Mercy later this month, on Sept. 28, also is pressing forward with a 150th anniversary celebration at Wilson’s Ciderhouse & Venue in Iowa City. In response to The Gazette’s question about how much it has budgeted for the event, Mercy officials said the hospital is “recognizing this significant milestone” and celebrating past and present doctors and employees who provided care to the community for 150 years.

“In addition, we are honoring the Sisters of Mercy, who founded the hospital and have been committed to it through the good and bad times. The celebration event will be small and include food for our current and retired employees, guest speakers, and music by a voluntary long-term supporter of Mercy,” officials said. "The meal for our employees is being prepared and served by our food services team.“

That event falls one day after Mercy had hoped to hold its final “sale hearing,” according to a proposed timeline that would have required bids competing with the UI offer by Sept. 19.

According to that proposed timeline, which has not been approved, an auction involving any competing bidders would have occurred Sept. 22, with a final sale hearing Sept. 27. But Mercy’s request to approve that time has been pushed back almost two weeks, to Sept. 13, following concerns from creditors and bondholders about its speed.

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