Total University of Iowa cost to buy Mercy near $40M

IOWA CITY — Including $28 million it bid in a bankruptcy auction to buy Mercy Iowa City, $8.5 million it covered of the hospital’s operating losses and $3.4 million it spent resolving Mercy’s unpaid contract obligations, the University of Iowa’s total cost to acquire the 150-year-old community hospital is expected to reach nearly $40 million.

That doesn’t include at least $25 million more in “immediate facility upgrades” the UI committed to spend in flipping results of the bankruptcy auction from bondholder Preston Hollow and trustee Computershare — first declared the winner in October with a $29 million bid — to the university.

The Mercy operating losses UIHC calculated as part of its final purchase price don’t reflect a monthly operating report the hospital filed with the bankruptcy court showing $30.6 million in operating losses for January alone. The operating losses that UIHC agreed to cover differ from those required for court records.

“This is a complicated and expensive process,” UIHC Vice President for Medical Affairs Denise Jamieson told The Gazette in January. "We anticipate that, as a site, Mercy is not going to make money anytime in the near future. We understand that. We've built that into our projections.

“But what we anticipate, what we hope for, is that we're creating a sustainable system for them so that the employees know that when they sign on with us, they're within the safety net of the university system.”

Transition to date

Fast forward to last week — nearly a month after UIHC officially absorbed into its sprawling health care network the former Mercy Iowa City campus, nearly 1,000 new employees and physicians, 192 licensed beds and 10 clinic locations — Jamieson told the Board of Regents, “The go-live week went very well, with minimal issues and no disruption to patient care.”

In addition to Mercy Iowa City — which UIHC renamed its “Medical Center Downtown Campus” — the university next year is planning to debut a $525.6 million orthopedics-heavy hospital in North Liberty, which also will include an emergency room.

“For now, our approach is that we’re maintaining existing medical services at our Downtown Campus,” Jamieson told the regents. “We're going to be focusing on really stabilizing operations, beginning critical infrastructure repairs, implementing Epic — our electronic medical record — and we'll be conducting a comprehensive review on the best way to operate coordinated care across what will now be three campuses, when North Liberty comes online.”

Through that process, Jamieson said, UIHC will seek input from “community stakeholders.”

“As we look toward the future, we also need to consider larger questions for how we're going to organize our health system overall in our mission to ensure access to health care for Iowans,” she said.

UIHC Chief Executive Officer Bradley Haws provided regents with more detail on what community and workplace feedback could look like, including creation of a new advisory committee involving six community members.

Those committee members include:

The university also added three Downtown Campus team members to an existing Clinical Staff Committee and created a new committee aimed at addressing the needs of 300 community health care providers, who'll continue to be allowed to care for patients at the Downtown Campus — without being employed by the UI.

“So that they can also have a voice with the senior management team at UI Health Care and that we're understanding what their needs and perspectives are as we continue to integrate,” Haws said.

Downtown campus future

Looking forward, the university has kicked off a “coordinated process to field ideas and requests and suggestions around what services should be provided on that campus.”

UIHC administrators are collecting feedback from existing UI team members, those from the former Mercy campus and the community.

“As part of that strategic assessment, we've commissioned a facility and equipment assessment to look at the condition of what they have there on the Downtown Campus and how that integrates with our existing structures,” Haws said.

That assessment will incorporate infrastructure, equipment and issues — from leaky roofs to backup generator power to the size and scope of rooms “and many, many details that will also integrate back to the services that we want to put there.”

“Which ones do we want to invest in?” Haws asked. “Which ones will we actually co-locate on the academic main campus? And which ones will we move there?”

The heaviest lift underway is transitioning the new Downtown Campus onto UIHC’s electronic medical system, Epic, according to Haws. The planned go-live date for that transition is May 4.

“It's such a big lift that some of the Downtown team has basically said, ‘We're really looking forward to integrating with you, but — in the short term — we have to be all hands on deck for Epic’,” Haws said.

Regarding operations since UIHC took over Mercy, Haws said patient volumes have remained consistent or even seen increases in areas.

“We feel good about the fact that we did not see a reduction in the services being provided,” he said. “And we hope to grow those services over time.”

Identifying ways the campus integration has been helpful, Haws said some aged CT machines on the Downtown Campus went down at one point, diverting those services to the UIHC main campus instead.

But in the opposite direction, on one day in February, UIHC was at capacity in its labor and delivery department.

“We were full in terms of our capacity to deliver new babies, and we were able to redirect — prior to mothers showing up here — the services over to that campus so that mothers that were scheduled for an induction or a C-section were able to keep that date,” Haws said. “They didn't have to reschedule time away or family in town, and we were able to use our integrated OB teams to deliver those services now in a combined service.

“So the ability to move patients more in a coordinated fashion I think is a real win for the community as we go forward,” he said.

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