Bankrupt Prospect Medical Holdings announced Friday that it intends to sell Crozer Health to a “not-for-profit consortium of health-care operators,” with state involvement in its plan, but officials from the Pennsylvania attorney general and governor’s offices monitoring the bankruptcy did not confirm that a deal had been reached.
The announcement by Prospect does not mean a deal will be completed. This is the third time Prospect has announced a sale of Crozer since 2022. The two previous proposed sales fell through. Prospect did not name the health-care operators who would participate in a consortium.
Representatives from Jefferson Health, University of Pennsylvania Health System, and Temple University Health System did not immediately respond to an email asking whether those organizations are part of the consortium.
Penn had offered to provide assistance when the state sued last fall seeking to take over Crozer. Jefferson and Temple are providing services at Crozer-Chester Medical Center.
Main Line Health’s hospitals have cared for additional patients because of the turmoil at Crozer, but the nonprofit “is not participating in a nonprofit health-care consortium to acquire Crozer Health at this time,” spokesperson Phil Ellingsworth Jr. said in an email.
“Main Line has been involved in conversations aimed at solutions should a closure occur and stand ready to work with partners to address any community needs,” Ellingsworth wrote.
Prospect is a for-profit company, based in California, that operates outpatient clinics and two hospitals — Crozer-Chester Medical Center in Upland and Taylor Hospital in Ridley Park — in Delaware County, where the system is the largest health-care provider.
Prospect previously closed two other Crozer hospitals in Springfield and Drexel Hill.
It its emergency motion Friday, Prospect said that an agreement was reached “merely hours” before “the potentially unavoidable decision to shut hospital doors and begin turning away patients” would have been made.
The motion did not include a copy of the sale agreement, as is usually the case in such filings, suggesting that the agreement was not complete when the motion was filed just before 11 a.m.
The motion also says that the state attorney general had agreed to a settlement with Samuel Lee and David Topper, two top Prospect executives who collected a combined $160.5 million in dividends between 2011 and 2019, according to a recent U.S. Senate Budget Committee report.
Lee and Topper were targeted in an Oct. 29 attorney general lawsuit that aimed to claw back some of the profits Prospect and its private-equity owner Leonard Green Partners & Partners took out of Crozer.
A copy of Lee and Topper’s settlement was not included in the filing.
If a final agreement is reached, a bankruptcy hearing would be held Thursday to seek emergency approval of the sale, Prospect’s news release said.
Prospect was under pressure to unload Crozer this week because its bankruptcy budget had money for Crozer only through Friday, according to the sale motion.
Prospect’s bankruptcy lawyer, Thomas R. Calfano, of Sidley Austin, said in a Jan. 14 bankruptcy hearing that Crozer had a $130 million annual operating loss.
The new release noted that “the proposed sale remains subject to definitive documentation.” The company did not respond to a question about why it announced the sale before a final agreement was reached.
Difficult negotiations
Prospect, which filed for bankruptcy Jan. 11, has been negotiating with representatives of Gov. Josh Shapiro’s administration and the state attorney general to transfer Crozer to a new nonprofit. Pennsylvania officials have been involved because the state has been working for more than a year to keep open the hospitals, which are seen as vital providers of health care in a low-income area.
Multiple sources familiar with talks over the future of Crozer say state officials hope that that a temporary manager known as a receiver could stabilize Crozer in six to nine months. It would then be transferred to a new nonprofit backed by other local health systems.
That time would also be used to determine what services are essential and financially sustainable for Chester and other nearby communities that depend on Crozer.
It was unclear how much money would be needed to sustain services at Crozer during a transition to a new nonprofit, or whether the state would provide such funding. A sticking point in negotiations is whether the new entity would be responsible for any of Prospect’s liabilities at Crozer.
The bankruptcy filing last month followed years of turmoil, slashed programs, and multiple rounds of layoffs since Prospect acquired Crozer in 2016 from the nonprofit Crozer Keystone Health System. Prospect has been trying to sell Crozer and hospitals in Connecticut and Rhode Island since fall 2021.
Among the recent cutbacks by Crozer was the closure of Philadelphia Cyberknife on Dec. 31 without proper 60-day notice, according to a recently released state inspection report. The facility in Havertown provided treat cancer.
Crozer still fills an essential role: The emergency departments at its hospitals had a combined 65,000 visits in 2023. The two units, which share a single license, were the sixth busiest ED in Southeastern Pennsylvania outside of Philadelphia, according to state health data.
Staff writer Sarah Gantz contributed to this article.
Editor’s note: This story was updated with additional detail and comment.
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