Crozer Health in Delaware County to close, leaving patients and employees in limbo

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Crozer Health, Delaware County’s largest hospital system, will close its doors within 30 days — creating an emergency health care desert in one of Philadelphia’s most densely populated suburbs.

The death rattle of Crozer Health comes after Pennsylvania, Delaware County, Penn Medicine and the Foundation for Delaware County pumped a total of $46 million over recent months to keep it functioning amid bankruptcy proceedings and sale negotiations to transition the system to a new owner.

California-based parent company Prospect Medical Holdings pulled the plug Monday, leaving patients and staff in limbo about future care and jobs.

“Today, Prospect Medical Holdings made the extremely difficult decision to begin winding down operations across our Crozer Health facilities,” Prospect Medical Holdings officials said in a statement. “Unfortunately, we were unable to reach a viable alternative.”

While major hospital operations at Crozer-Chester Medical Center and Taylor Hospital will close, Prospect Medical said ambulatory surgery and imaging centers in Brinton Lake, Broomall, Haverford and Media will remain open.

“At this time, the focus at Crozer Health remains on seamlessly transitioning patients to other health facilities so that they can continue to receive the critical, uninterrupted care they require,” company leaders stated. “And to support Crozer Health team members as they seek to identify other employment opportunities.”

Emergency declaration in Delco

Delaware County issued an emergency declaration in response to the planned closure. The declaration, which will be in effect for seven days, will grant the county more flexibility in addressing the closure.

Delaware County Council said in a statement Monday evening that it’s in the process of filing an objection to Prospect’s closure motion, claiming it violates county law.

“The ordinance requires a healthcare provider like Prospect to provide an adequate plan with 180 days’ notice to the county. To date, Prospect has failed to do so,” county officials said.

Crozer Health also used to operate Delaware County Memorial Hospital and Springfield Hospital, until they both shuttered in 2022.

The health system currently employs nearly 3,000 people. According to a layoff notice obtained by WHYY News, the affected employees include:

• 1,908 employees at Crozer-Chester Medical Center
• 45 employees at Crozer-Chester Medical Center’s behavioral health unit
• 88 employees at Crozer Health’s corporate offices
• 351 employees at Taylor Hospital
• 80 employees at Crozer offices in Chester

Another 179 employees who were still employed at Springfield Hospital in outpatient and administrative services will also be affected by the new closures.

State officials said the Pennsylvania Department of Labor & Industry’s Rapid Response Services is working with the hospital system and employee union leadership to support displaced workers with employment services and information.

“Delaware County has been working closely with the Delaware County Workforce Development Board to prepare for re-employment services for impacted workers and is finalizing plans for a dedicated location for Prospect employees who will seek new employers,” the county said. “The county will make additional announcements regarding those dedicated services in the near future.”

FTI Consulting, which was tasked with shepherding the distressed health system’s finances, issued a statement thanking employees, patients and parties who offered solutions.

“As Court-appointed receiver, we are disappointed an alternative resolution and sale could not be reached,” the receivership said.

Crozer began transitioning operations in an attempt to sustain itself in recent weeks in accordance with FTI’s service line transition plan. Main Line Health raised its hand to absorb Crozer’s OB-GYN services. Taylor moved to axe home care and hospice units as early as June.

“The ‘FTI plan’ was one of recovery and exploration of a possible sale, not closure,” the receivership said.

A bankruptcy hearing related to the closure notices is set for Tuesday afternoon.

‘Disappointed’ Pa. officials seek ‘to hold Prospect accountable’

Representatives from the Pennsylvania Office of Attorney General were heavily involved in sale negotiations. In a statement, spokesperson Brett Hambright said the office was “deeply disappointed” by the closure news.

In the end, office leaders said the “damage inflicted” by Prospect’s former owner, private-equity firm Leonard Green & Partners, “who prioritized their own wealth over the well-being of a community, was too much to overcome.”

The attorney general’s office pledged to continue working through the bankruptcy process to recoup money owed to the Commonwealth “to the greatest extent possible in order to hold Prospect accountable for actions that caused this closure.“

Gov. Josh Shapiro accused Prospect of pillaging the hospitals “for their own personal gain” and committed to working alongside the attorney general in the bankruptcy case.

“And we must ensure this never happens again by passing legislation to get private equity out of the health care business in Pennsylvania,” Shapiro said in a statement.

Crozer is integral to shaping the county’s history and economy. The Delaware County Legislative Delegation said in a statement that they’re “furious.”

“Delaware County legislators, Governor Shapiro’s office, and The Office of the Attorney General have been working night and day for months to stop the hemorrhaging Prospect’s dealings created while finding bridge funding to keep Crozer open under new ownership,” the lawmakers said.

Pennsylvania and Delaware County put up a combined $20 million in taxpayer money in February to give the receiver enough cash to keep Crozer running for at least 30 days.

Prospect first signaled the possible closure of the hospitals when money for payroll ran dry in March. A $7 million cash infusion from the Foundation for Delaware County avoided closure at the time. A civil lawsuit nearly blocked the flow of more cash, but  the community nonprofit eventually OK’d another $13 million for hospital payroll and overhead.

Bankruptcy attorneys for Prospect asked for more help for Crozer in April before U.S. bankruptcy Judge Stacey G. C. Jernigan of the Northern District of Texas, requesting another $9 million to prolong negotiations. Penn Medicine and Delaware County answered the call, although they came up $3 million short of Prospect’s request.

Negotiations between Prospect and the unnamed consortium of buyers have been underway ever since. Crozer CEO Tony Esposito stepped down Friday. Greg Williams, president of Prospect’s East Coast operations, assumed Esposito’s role in the interim.

“At a time when the federal government is planning massive cuts to Medicaid and Medicare and when most hospital systems are already in the red due to below-cost reimbursement from those public-payor programs, bailing out Crozer became a problem without a solution,” the delegation said.

Foundation for Delaware County President Frances Sheehan said in a statement that the closure of two more hospitals “will significantly reduce emergency healthcare options.”

“Our maternal health team has been working closely with County Council President Dr. Monica Taylor and healthcare leaders for months,” Sheehan said. “We are grateful to Riddle Hospital, Nemours, and CHOP for planning for a significant increase in births and pediatric care, and to all our region’s health systems for partnering with the Delaware County Health Department to coordinate and implement an emergency plan that our citizens will need now that Crozer Health is closing.”

Editor’s note: The Foundation for Delaware County is a WHYY supporter. WHYY News produces independent, fact-based news content for audiences in Greater Philadelphia, Delaware and South Jersey.