Foundation files petition to block the planned closure of Delaware County Memorial Hospital

The Foundation for Delaware County filed a petition Wednesday to block Prospect Medical Holdings Inc.’s planned closure of Delaware County Memorial Hospital in Upper Darby.

The foundation represents the interests of the former nonprofit owner of the Crozer-Keystone Health System, which Los Angeles-based Prospect acquired in 2016 for $300 million, most of which went to pay off liabilities. Ultimately, the foundation collected $55 million from the sale.

The foundation’s petition, filed in the Court of Common Pleas of Delaware County, says Prospect’s purchase agreement required it to get the foundation’s consent before closing any of the hospitals it acquired from Crozer-Keystone. That provision is in effect until July 1, 2026.

Judge Barry C. Dozor scheduled an Oct. 7 hearing on the request for an emergency preliminary injunction.

» READ MORE: Crozer Health will turn Delaware County Memorial into a mental health hospital

The health system announced a week ago that it planned to close Delaware County Memorial as an acute care hospital, including the emergency department, within 60 days and turn it into an inpatient psychiatric facility to meet a significant need in the region.

Crozer filed a layoff notice with the Pennsylvania Department of Labor with a closure date of Nov. 26, saying it would eliminate the jobs of 258 union workers plus those of 76 others. Crozer said all of the impacted workers would be able to get jobs elsewhere at Crozer.

Delaware County officials last week said they were glad that some parts of Crozer’s plan, including the repositioning of Springfield Hospital as an outpatient center, were responsive to community needs, but on Wednesday, they blasted the company.

“Closing Delaware County Memorial would be catastrophic for our residents that have depended on its services for generations,” Delaware County Council Chair Monica Taylor said in a news release.

“It is an unacceptable course of action by Prospect Crozer, and the county remains committed to ensuring that the public health needs of our residents are a priority over the financial considerations of a for-profit corporation,” she said.

Crozer said in a statement that management had discussed its plan with foundation officials and expected those conversation to continue. “We are concerned that this step on the foundation’s part could potentially further destabilize the system,” Crozer said of the effort to block the changes at Delaware County Memorial.

» READ MORE: Crozer Health and ChristianaCare end talks on merger. Crozer could become a nonprofit.

The closure announcement came a month after ChristianaCare ended negotiations on its possible purchase of Crozer in August.

Part of Crozer’s plan to become financially viable, aside from consolidating hospital services at Crozer-Chester Medical Center in Upland, is to become a nonprofit. It’s not clear how a nonprofit Crozer would be structured — for example, whether Prospect would still manage it after the assets were donated to a new 501(c)(3) charitable organization.

A document included in the Foundation for Delaware County’s lawsuit says that Crozer intends to file for its nonprofit conversion by Dec. 1 and expects the process to take nine to 12 months.

Nonprofit ownership is unlikely to solve many of Crozer’s problems. It would remain stuck with expensive lease payments to Medical Properties Trust, which acquired Crozer real estate in 2019 as part of a large transaction with Prospect.

On top of that, most hospitals are struggling financially these days as they try to recover from the pandemic and contend with high labor costs and worker shortages.