![]() “While labor and inflation pressures are sector-wide challenges, the impact to Mercy has been disproportionate and has been exacerbated by the implementation of the new billing system which caused receivables to balloon during the last quarter of FY 2022,” according to Moody’s. The Moody’s report said Mercy’s “cash flow losses are largely reflective of elevated labor and supply costs and a slowed revenue cycle after implementation of a new billing system.” Mercy’s cash and cash equivalents fell from $22.1 million in the 2021 budget year to $5.8 million at the end of fiscal 2022 its total assets in December were down to $179.1 million from $209.9 million six months earlier in June. In December, the hospital reported net assets at $34.5 million - down $60.3 million or 64 percent from $94.9 million in December 2021, according to disclosures published by the Municipal Securities Rulemaking Board. The 194-bed Iowa City hospital - one of 23 affiliated with the MercyOne network, despite Mercy’s recent efforts to find a new partner or owner - last summer had to retain a performance-improvement consultant after breaching debt coverage obligations. You will begin to receive our Daily News updates. Add your contacts. “The pandemic, higher operating costs and inflation have converged to create an environment where it is increasingly harder to grow revenue and reduce expenses.” “The past few years have presented many challenges to all hospitals, making it an extremely difficult time to work in health care,” he wrote. “Our patients, their families and community need the type of medical care only provided at a community hospital like Mercy Iowa City.”Īcknowledging Mercy’s struggles, Trachta said the hospital is not alone. “While this decision is disappointing, our focus must remain on providing high-quality care and improving business operations,” Trachta wrote. In alerting employees to the Moody’s downgrade last week, Mercy Iowa City Acting President and CEO Mike Trachta in an email said the change was based on “past financial performance.” ![]() ![]() Moody’s recent Mercy report said the Iowa City hospital had $74.4 million in outstanding debt at the close of the 2022 budget year last June Moody’s in May 2022 reported UIHC’s total outstanding debt was about $515 million. Moody’s assigns its Caa1 rating to entities with financial obligations in “poor standing” and “subject to very high credit risk.” Mercy’s larger nearby competitor referenced in the report - the University of Iowa Hospitals and Clinics - last year received a Aa2 rating on its debt, putting it near the top of the scale. ![]()
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