(Radio Iowa) – An investment firm has outbid the University of Iowa in the bankruptcy court auction of Mercy Hospital in Iowa City. Texas-based Preston Hollow Community Capital had invested nearly 42 million dollars in Mercy Iowa City in 2018. Preston Hollow has announced a California company with experience in rehabilitating hospitals around the country will step in and continue to operate Mercy Iowa City as a community hospital. Mercy Iowa City filed for bankruptcy in August. The University of Iowa had offered a 20 million dollar bid to merge Mercy Iowa City operations into its health care system.

Mercy Iowa City executives say transition plans are underway and American Healthcare Systems is likely to begin managing the hospital next month. The amount of the winning bid for the hospital has not been disclosed. A bannkruptcy court hearing to approve the deal is set for later today (Wednesday). The president of the University of Iowa and the dean of its College of Medicine released a statement early this (Wednesday) morning, saying they are disappointed in the outcome because they believe there is value in having patient care delivered by an Iowa-based health system — but the two added they are heartened the selected bidder is committed to keeping Mercy Iowa City as a hospital.