CHA Partners, a bidder for Crozer Health, is defending its performance at Salem Medical Center

The founder of a New Jersey real estate company in the early stages of negotiating a deal to acquire Crozer Health defends his company’s track record running another financially struggling hospital, Salem Medical Center in South Jersey.

Bill Colgan, managing partner at CHA Partners, said CHA achieved its goals at Salem, even though a local foundation involved ended up losing half its endowment.

“Our goals for Salem Medical Center included transitioning the hospital back to a nonprofit corporation, maintaining all acute care services, and expanding the emergency department to effectively manage behavioral health patients,” Colgan wrote in a letter emailed to The Inquirer Wednesday.

The ultimate goal was to integrate the former Memorial Hospital of Salem County into a regional nonprofit health system. “In December 2022, despite the challenges posed by the pandemic, CHA accomplished all its goals, and Salem Medical Center successfully became part of the Inspira Health Network,” Colgan wrote.

CHA is expected to replicate its Salem playbook at Crozer, with the end goal of making Crozer part of a larger nonprofit system. However, Crozer is far more complicated than Salem, and turning it into a viable business will require help from the government, private health insurers, and the real estate firm that holds the mortgage on Crozer’s property, according to industry experts.

» READ MORE: What CHA Partners' ownership of Salem County hospital says about the firm.

The largest health system in Delaware County, Crozer has experienced service cuts and hospital closures over eight years of ownership by Prospect Medical Holdings Inc. Crozer was struggling financially when Prospect bought it. The Los Angeles for-profit signed a tentative agreement last week to sell Crozer to CHA for undisclosed terms.

The Salem County hospital also was in bad shape when CHA acquired it in 2019. Community Health Systems Inc. purchased the 126-bed community hospital in 2002 for $35 million, but had been trying to sell it for years after trimming services, including the maternity ward in 2010. The hospital was expected to close if CHA hadn’t taken over.

The Salem Health and Wellness Foundation, established with $32.2 million in net proceeds from the sale to Community Health Systems, provided a $14.5 million grant and a $14.5 million loan to help get the renamed Salem Medical Center off the ground. Salem County Hospital Corp., a nonprofit, owned the hospital, but for-profits managed it.

Before the sale to Inspira, the foundation provided an additional $10 million in loans, bringing its total support to $39 million. The foundation forgave $20 million of its loans as part of that sale, but CHA still owes it $3 million. The foundation won a Superior Court judgment in May for the $3 million, plus interest and legal fees.

Colgan’s letter did not mention that litigation.

Historically, CHA, founded in 2008, has served as a “buyer of last resort” that doesn’t show up until a seller has exhausted all other options. Typically, that involves a bankruptcy. CHA is based in Bloomfield, N.J.

Before coming to Salem County, CHA had acquired Barnert Medical Arts Complex in Paterson, the Greenville Medical Arts Complex in Jersey City, the William B. Kessler Medical Arts Complex in Hammonton, and the Muhlenberg Medical Arts Complex in Plainfield.

All were closed hospitals that CHA turned into medical complexes. “In each case, the community would have lost a critical health-care asset if not for CHA’s efforts,” Colgan said.