Prospect Medical Holdings reaches deal to halt litigation, opening 270-day window to sell Crozer Health

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Prospect Medical Holdings is eager to sell Crozer Health, its struggling four-hospital system in Delaware County.

The for-profit hospital company may now have the chance to fulfill its wishes.

Prospect reached a deal with the Foundation for Delaware County and the Pennsylvania Attorney General’s Office to halt active litigation against it to open a 270-day window to sell Crozer to a successor.

The parties filed a written agreement with the court, asking for the judge’s approval. The Foundation for Delaware County issued a press release that said it anticipates Prospect will seek proposals for the hospital system transfer during this pause in legal proceedings.

“The Foundation is hopeful that a high quality, nonprofit system or consortium of systems will come forward to acquire a health care system that so many Delaware County residents need and deserve,” the foundation said. “The Foundation is appreciative of Delaware County’s and the Attorney General’s assistance in coordinating the agreement among the parties.”

Calling it a “public health emergency,” the nonprofit sued Crozer and Prospect in September 2022 over their plans to shutter Delaware County Memorial Hospital.

The foundation holds standing in the matter because it was involved in the initial sale of the Crozer-Keystone Health System to Prospect that shifted the system from a nonprofit to a for-profit.

Then-Pennsylvania Attorney General Josh Shapiro intervened in the lawsuit on the side of the foundation, accusing Prospect of contempt. Since then, Crozer’s hospitals have continued to hemorrhage critical services, struggled to pay important vendors, and laid off health care workers.

This recent move comes as lawmakers, staff, and community members have turned up the heat on for-profit hospitals in Pennsylvania — and as Prospect restructured its lease with its landlord, buying more time for the embattled company.

“We are pleased to reach this agreement,” Prospect and Crozer said in a written statement. “We will continue to work to make sure our community receives excellent patient care.” The state attorney general’s office did not immediately respond to a request for comment.