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If Prospect Medical Holdings is to sell Crozer Health within the next 270 days, the new owner must be a nonprofit, according to a court-approved deal.
The clock is now ticking for the for-profit company to find a buyer for the embattled four-hospital system in Delaware County.
Delco Court of Common Pleas Judge Cheryl Austin approved a proposal to pause Delaware County Memorial Hospital litigation between Prospect, the Foundation for Delaware County and state AG office, opening a 270-day sale window.
The entities reached the deal in October in the aftermath of Crozer’s hospitals shuttering key services and programs, failing to pay vendors, and laying off staff. Now, details of the agreement are set in stone, including one that could return Crozer to its previous status.
“We are pleased that the Attorney General’s Office is requiring that any buyer of Prospect Crozer must be a non-profit,” said Frances Sheehan, president of the foundation. “Now that the stipulation is signed, we would expect that there are no more hurdles remaining in the way of Prospect issuing a Request for Proposals seeking reputable non-profit suitors that can work with the excellent staff there to rebuild a desperately needed health system.”
The foundation maintains legal standing in the case because it was party to the initial sale of the Crozer-Keystone Health System to Prospect, which changed the system from a nonprofit to a for-profit.
“We are pleased the Court has issued the order and we look forward to continuing to serve the community as this process moves forward,” a Crozer spokesperson said in a statement.
What is Prospect required to do as part of the deal?
According to the signed agreement, Prospect has 20 days to formulate and issue a request for proposals. Interested parties will then have a 30-day window to apply to acquire all of the company’s assets in Pennsylvania. Prospect is required to submit the list of potential buyers and keep the state abreast of the process.
By the 140th day of a court-approved deal, the prospective buyer must complete its due diligence process and enter into an asset purchase agreement with Prospect.
“The court directs the AG to scrupulously attend to all deadlines set forth in the Letter Agreement and to promptly report to the court any deviation by Prospect from those deadlines or any other defalcation of the terms set forth,” Austin wrote in Thursday’s order.
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