After committing millions of dollars toward the creation of a healthcare alliance, Iowa City-based University of Iowa Health Care informed its board of regents June 6 it needs $7.5 million "to meet cash flow requirements to facilitate discontinuance," according to The Gazette.
The Gazette reports the $1.4 billion healthcare system asked the board of regents June 6 to approve the transfer of $9.5 million to its separate nonprofit University of Iowa Health System, which oversees its alliance, principally for the dissolution of the alliance.
Officials told the publication in a June 6 statement, "The ultimate cost of closeout is expected to be less after final dissolution. Capital commitments to the alliance must be met by all members for it to accommodate closeout expenses, including multiyear contractual commitments with third parties engaged by the alliance and direct personnel support."
In 2012, UI Health Care established the UI Health Alliance, which includes members such as Davenport, Iowa-based Genesis Health System and Burlington, Iowa-based Great River Health System. The health system also launched an ACO in 2015 to allow its member organizations to contract together on coordinated patient care.
However, UI Health Care announced its decision in March to exit both the alliance and the ACO, citing industry and budgetary uncertainty, the report states.
"Given a rapidly changing healthcare environment, reductions in federal and state reimbursements, uncertain financial headwinds and looming cuts in state appropriations to the University of Iowa, continuing to participate in the alliance and its ACO would become increasingly difficult," UI Health Care administrators told The Gazette at the time of its March announcement.
In addition to the necessary cash flow for the dissolution, UI Health Care also asked the board of regents June 6 for $2 million to cover "residual cash flows of UI Community Connect projects," which included initiatives such as installing clinical information systems at community hospitals.
The board of regents is expected to issue a decision on the $9.5 million transfer June 7, according to the report.
Editor's note: Becker's Hospital Review reached out to UI Health Care for comment and will update the report as more information becomes available.