Crozer Health is laying off 215 people to reduce losses

Crozer Health announced Wednesday that it was laying off 215 people, or 4% of its total workforce, as the Delaware County health system tries to stem financial losses.

The job cuts come as health systems are facing extraordinarily high labor, drug, and supply costs that have not been matched by higher payments from insurance companies, leading to widespread losses.

Crozer, which is owned by Prospect Medical Holdings Inc. of Los Angeles, said in a statement that its latest restructuring “focuses on removing duplication in administrative oversight and discontinuing underutilized services.”

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The services to be closed within 60 days are the sleep center at Taylor Hospital, cardiac rehabilitation and wound care in Springfield, and outpatient drug and alcohol treatment at Crozer-Chester Medical Center.

“We made the difficult decision to restructure our operations in order to ensure that resources are properly allocated to meet our patients’ and our communities’ most pressing health care needs, while at the same time allowing us to stem the financial losses,” said Crozer CEO Anthony Esposito.

Crozer has been in financial turmoil since early last year, when Esposito’s predecessor, a Prospect executive, cut many administrative jobs and tried to close some behavioral health and drug-treatment programs. Legal action from Delaware County forced Crozer to reopen them, but Crozer struggled to rebuild after that disruption.

There are 17 patients remaining in Crozer’s drug and alcohol treatment program, and they will be moved to other providers, Crozer said.

After Prospect failed to reach a final deal to sell Crozer to ChristianaCare last summer, Crozer announced a plan to convert Delaware County Memorial Hospital in Drexel Hill into an inpatient mental health and drug-treatment center and to turn Springfield Hospital into a center for outpatient services.

The Pennsylvania Department of Health last fall ordered Delaware County Memorial’s emergency department to close because of inadequate staffing. Its acute-care services remain closed, and its future is tied up in litigation.

The closure of Delaware County Memorial and other moves last fall helped reduce Crozer’s monthly losses to $7 million from $12 million. Crozer said it expects to break even when all of the planned changes are completed.

Crozer’s financial woes stem in part from the sale of its real estate for $420 million when it was under the control of Leonard Green & Partners as part of a $1.55 billion deal in which Prospect hospitals in three states lease back their buildings from a real estate investment trust. That sale effectively loaded the hospitals with debt.

That landlord, Medical Properties Trust, announced last month that it had written off $171 million, or 40%, of the $420 million it paid for the Crozer real estate.

Medical Properties Trust also told Wall Street analysts that Crozer was not paying rent.