Prospect intends to sell Crozer Health to a ‘not-for-profit consortium of healthcare operators’

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Prospect Medical Holdings announced Friday it intends to sell Crozer Health, Delaware County’s four-hospital system, to a “not-for-profit consortium of healthcare operators.”

State Sen. Tim Kearney, of Delaware County, told WHYY News that caveats and details still must be sorted out among all of the negotiating parties, which include Prospect, the state attorney general, the governor’s office and the mysterious group of suitors.

“It’d be a nonprofit entity which would actually run the hospital system,” Kearney said. “We’re at a point now where there’s a general agreement on that — but again, there’s always devils in the details and there’s obviously money issues that need to be sorted out.”

The California-based company plans to seek approval for the proposed sale from a federal bankruptcy judge Thursday.

“It certainly was floated that the idea that if this doesn’t work then they’re going to ask for an emergency closure,” Kearney said. “We’re all trying very hard not to go there”

In Friday’s news release, Prospect did not identify which parties would be a part of the consortium looking to take over the reins of the distressed Crozer system.

“By selling Crozer Health to a group of experienced healthcare operators, the communities in and around Delaware County will continue to access and receive the critical healthcare services they require,” Crozer CEO Tony Esposito said in a statement. “We appreciate the support of the Commonwealth of Pennsylvania, as well as all parties involved, to make this transition possible.”

In an email to Crozer staff obtained by WHYY News, Esposito called news of a sale “a positive development.” He acknowledged that steps are still needed to complete the sale, but told employees that they would still receive pay and the hospitals would remain operational.

Kearney said Prospect wants to offload Crozer as quickly as possible.

“We want to make sure that they meet their obligations on the way out the door sort of thing,” he said. “We’re talking millions of dollars. Every two weeks they have to make a $6 million payment …that’s just for salaries [and] overhead and who’s actually paying that is going to be part of what we’re talking about.”

He urged Crozer employees to be cautiously optimistic.

“We’re not exactly sure what’s going to happen,” Kearney said. “We don’t know at the end of this six-month period where this transition is going to occur, what the hospital is actually going to look like.”

Prospect filed for Chapter 11 bankruptcy Jan. 12, announcing its plans to shift focus on its operations in California and intention to continue selling its hospital systems in Connecticut, Pennsylvania and Rhode Island.

The company purchased Crozer in 2016. Today, Crozer operates just two functioning hospitals: Crozer-Chester Medical Center in Upland and Taylor Hospital in Ridley Park. As such, local lawmakers have dueled with Prospect in recent years over service cuts and ward closures.

The bankruptcy filing paused active litigation the Pennsylvania Office of Attorney General initiated in October, which was aimed at holding Prospect accountable for mismanagement and “corporate looting.”