Layoffs expected at Mercy Iowa City

Private Catholic hospital has faced low inpatient admissions, other financial challenges

Mercy Hospital in Iowa City on Friday, May 9, 2014. (Stephen Mally/The Gazette)
Mercy Hospital in Iowa City on Friday, May 9, 2014. (Stephen Mally/The Gazette)

IOWA CITY — Mercy Iowa City will cut 115 positions -- with 65 people expected to be laid off or have their hours reduced Tuesday -- amid financial struggles that have been ongoing, despite the small private hospital joining a regional health network earlier this year.

Shane Cerone, interim Mercy Iowa City CEO, announced at an all-staff meeting Monday evening 65 full- and part-time employees, most administrative or support personnel, would be laid off or have their hours reduced Tuesday. Another 50 positions will not be filled after retirements or other attrition, the hospital announced in a news release Monday night.

“Due to the challenging health care environment and the competitive Iowa City market, Mercy Iowa City, along with support and resources from Mercy Health Network, is making changes to improve our operating and financial performance,” the hospital said. “Mercy is committed to maintaining its position as a leader in care quality and efficiency, and to providing support and assistance to staff who have been impacted by these changes.”

The cuts will be made at the main hospital, not Mercy’s clinics, and employees will be retained based on seniority, said two employees who attended Monday’s meeting, but did not want to be named for fear it might affect their jobs.

Mercy had about 1,440 full-time and part-time employees in April, so the reductions would affect about 8 percent of the workforce.

The 234-bed hospital announced in April it would join West Des Moines-based Mercy Health Network, a unified Catholic health network with 42 hospitals and 207 clinics in Iowa. This was after months of negotiations between Mercy Iowa City and another network, UnityPoint Health. These organizations in December signed a letter of intent to provide joint health care services, but that deal fell through.

Mercy Iowa City said in April the merger with the Mercy Health Network would “strengthen Mercy Iowa City’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, strategic growth opportunities, as well as access to the Mercy ACO (Accountable Care Organization).”


But financial difficulties have continued for the hospital, which eliminated 20 jobs in April. Those cuts were intended to make up for fewer inpatient admissions, lower reimbursement rates and other financial challenges.

Mercy Iowa City, started by Catholic nuns in 1873, has struggled with low inpatient admissions for several years. The hospital’s inpatient beds were about one-third full, on average, for 2014 and 2015, The Gazette reported in 2015. The hospital’s 2016 license application with the Iowa Department of Inspections and Appeals showed the average daily census was 76.4 patients for 234 staffed beds. The average daily census was down to 67.21 patients in the 2017 report, filed in December.

Mercy Iowa City closed its 16-bed skilled nursing unit last June because of lack of demand.

The University of Iowa Hospitals and Clinics, Mercy Iowa City’s crosstown competitor, reported earlier this month hiring a consultant to evaluate joining a larger regional system after lower-than-expected revenue.

UIHC officials told the Iowa Board of Regents the 761-bed hospitals’ fiscal 2017 income was 50 percent below budget and 72 percent below the previous year’s income. Officials said the loss was spurred by more denials from Iowa’s Medicaid Managed Care, state budget cuts and commercial payers leaving the insurance market.

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