Crozer Health’s owner filed for bankruptcy protection
The move by Prospect Medical Holdings was long expected. It's local hospitals, including Crozer-Chester Medical Center in Upland and Taylor Hospital in Ridley Park, are expected to continue operating.
Prospect Medical Holdings, the owner of Delaware County’s Crozer Health, filed for bankruptcy protection Saturday night. The move by the Los Angeles company was long expected, as it struggled to sell its money-losing East Coast hospitals in Pennsylvania, Connecticut, and Rhode Island.
Prospect’s hospitals, including Crozer-Chester Medical Center in Upland and Taylor Hospital in Ridley Park, are expected to continue operating during the bankruptcy. Both hospitals have seen significant cutbacks in services in recent years and are increasingly relying on other local health systems for support.
» READ MORE: Crozer Health since Prospect acquired it in 2016: A timeline
In an email sent to Crozer nurses and other Prospect employees after the filing in U.S. Bankruptcy Court for the Northern District of Texas, Prospect’s CEO Von Crockett said the company’s financial challenges were “due in large part to the lingering impacts of the COVID-19 pandemic, inflation, a significant cyberattack, and increased denials from health plans.”
The bankruptcy filing is expected to help facilitate the sale of the hospitals by eliminating some of the debts and other liabilities carried by Crozer and other Prospect hospitals.
The bankruptcy follows years of turmoil for Delaware County’s largest health-care provider.
Crozer has been under for-profit ownership since 2016, including several years under the control of a Los Angeles private equity firm. In that time, two of Crozer’s four hospitals have closed, and the system has endured numerous rounds of layoffs. State hospital inspectors get called to Crozer facilities for safety problems and complaints almost twice as often as to other area hospitals.
The bankruptcy filing will at least temporarily put an end to the Pennsylvania attorney general’s effort to take control of Crozer and to recoup $457 million in dividends paid to Prospect’s owners. That money came from debt piled on Prospect’s hospitals.
Crozer’s liabilities include a $155 million mortgage with Medical Properties Trust, its former landlord, and a pension liability estimated at $100 million or more. Many millions more are needed to upgrade outdated facilities and equipment. Any organization that took over Crozer would need at least some of those liabilities to be erased.
The initial Prospect filing had few details, listing the company’s assets and liabilities each in the range of $1 billion to $10 billion. The company’s biggest unsecured creditor is Cerner Corp., a software company owed $129 million. The second biggest is Medical Properties Trust, which is owed $61 million.