Crozer-Chester Medical Center’s bankruptcy fate could be known early next week
A new operator for Crozer Health could be picked as soon a next week, or the decision to close Crozer-Chester Medical Center and Taylor Hospital could be made, a Prospect bankruptcy attorney said.
Prospect Medical Holdings could ask as soon as Monday for approval to transfer Crozer Health’s hospitals to an operator chosen by the Pennsylvania attorney general, the company’s bankruptcy lawyer told a federal bankruptcy judge in Texas on Tuesday.
Alternatively, the Los Angeles-based for-profit company could be back in court next week with an emergency motion to close the Crozer facilities, Thomas R. Califano, of Sidley Austin LLP, told U.S. Bankruptcy Judge Stacey Jernigan during the first court hearing in Prospect’s bankruptcy.
Califano said there had been discussions with the attorney general’s office as recently as Monday.
“They’ve been moving very quickly, and we have pledged to do whatever we can with them to keep these hospitals operating, and get them in the right hands,” Califano said.
A spokesperson for the attorney general’s office confirmed that the office has had discussions with Prospect’s lawyers, but had no comment.
Prospect has been trying to sell Crozer and its other money-losing hospitals in Connecticut and Rhode Island since fall 2021. Gov. Josh Shapiro’s office said Sunday that it was working, as it has been for months, to get Crozer back into nonprofit hands, but it’s not clear that any local health systems were interested unless the state shouldered much of the risk.
» READ MORE: Crozer Health since Prospect acquired it in 2016: A timeline
Crozer has cash losses of $160 million a year, according to a document presented during the hearing in Prospect’s bankruptcy, which it filed late Saturday in Dallas.
Prospect, a company with $2.5 billion in annual revenue, was down to $3.4 million in cash last week, Prospect’s chief restructuring officer testified.
That meant the stakes were high during Tuesday’s hearing on Prospect’s plan for a short-term $25 million loan that would help it make payroll and pay vendors for the next four weeks.
Jernigan approved the 14% loan, plus an immediate $4 million fee paid to the lender, on an interim basis 3½ hours into the hearing. She said she was convinced that the consequences would be catastrophic if she did not.
Prospect’s hospitals include Crozer-Chester Medical Center in Upland and Taylor Hospital in Ridley Park, which have seen significant cutbacks in services in recent years and are increasingly relying on other local health systems for support.
Crozer-Chester is a crucial safety-net provider in a low-income area of Delaware County. Late last year, the state sought to take control of Crozer and to recoup $457 million in dividends paid to Prospect’s owners. That money would be shared with other states where Prospect has hospitals.