‘I lose sleep over this case’: Prospect cleared to close Crozer Health

A bankruptcy judge approved Prospect Medical Holdings’ plan to close Crozer Health on Tuesday, despite concerns from county officials and nurses about care access.

Article By: Susanna Vogel

Blog Source From : https://www.healthcaredive.com/

Dive Brief:

• U.S. Bankruptcy Judge Stacey Jernigan approved Prospect Medical Holdings’ plan to begin winding down operations at Crozer Health on Tuesday, after lawyers for the health system said an 18 months-long effort to find new buyers for the facilities was unsuccessful.
• Emergency departments at Crozer-Chester Medical Center and Taylor Hospital, both in Delaware County, Pennsylvania, are set to stop receiving patients by ambulance this week. They’ll continue to accept walk-in patients for up to a week after, according to the hospitals’ closure plan, which attorneys characterized as evolving.
• The closure plan faced significant pushback from county officials, nurses and nonprofits who warn that closing the facilities will force residents to travel farther for care and could risk lives.

Dive Insight:

The closure process kicked off on Monday, when Prospect informed state regulators it planned to close Crozer-Chester and Taylor. On the same day, the health system filed Worker Adjustment and Retraining Notification Act notices to terminate approximately 2,650 workers. 

Prospect had already shuttered two of Crozer’s four facilities, Delaware County Memorial Hospital and Springfield Hospital, in 2022.

Closing the remaining hospitals is expected to decimate care access in the region, where facilities have been closing since the COVID-19 pandemic, according to the The Foundation for Delaware County, a community nonprofit that advanced $20 million to Prospect during its bankruptcy proceedings to help keep Crozer afloat.

“The closure of two more hospitals will significantly reduce emergency healthcare options,” The Foundation for Delaware County said in a statement Monday. “It will also make it harder for people to attend doctors’ appointments and access vital medical services, including maternity care.”

The closures also drew rebuke from county officials, who issued an emergency declaration seeking to offset the damage by allowing greater flexibility for hiring, procurement and emergency medical dispatch services in the county.

“To be clear, Delaware County is extremely disappointed in this outcome, and in the actions of Prospect in every step of this process,” county officials said in a statement.

Still, attorneys for Prospect argued in court that the decision to close was financially necessary. Prospect filed for Chapter 11 bankruptcy protections in January with nearly $2.3 billion in total outstanding obligations, and has said it cannot afford to continue to fund operations at the hospitals.

Prospect appeared at various times to have buyers for Crozer, including an unnamed consortium of nonprofits in February and, more recently, Penn Medicine. But those deals never materialized. 

“We ran through — I can’t even put a number on it, in terms of how many iterations of plans and strategies and brainstorming sessions, to come up with ways to make this happen. But it all just came down to funding, and the funding just wasn’t there,” said William Curtin, an attorney for Prospect, during Tuesday’s hearing.

The judge ultimately agreed.

“I lose sleep over this case,” Jernigan said. “I worry about persons having a heart attack and they can’t get to a very close facility. I worry about people getting in a car wreck or getting shot or burned, a mama going into labor. I just hate the widespread consequences here.”

Still, Jernigan concluded, “It seems like we just don’t have any other options. We can’t print money. No one here can.”

The bankruptcy hearing to decide the fate of Crozer Health drew a large virtual audience of nearly 800 on Tuesday, as employees and patients waited anxiously to hear the fate of the region’s critical care facilities.

Users flooded a chat function of the court webcast with messages asking for clarification about when nearby facilities might close, or castigating Prospect for its management of Crozer.

“Shame shame on prospect,” one user wrote under the name Dawn Andonian. “Lock them up.”

Peggy Malone, the president of the Crozer Nurses Association and an employee who’s worked at Crozer for 37 years, said she was left “dumbfounded” after the hearing. Malone worries the county’s poorest patients will struggle most after Crozer winds down.

“I struggle with the fact that we save airlines and we help auto industries and weren’t able to save the hospital,” Malone told Healthcare Dive. “That’s going to take me a long time to process.”

Meanwhile, Crozer’s closure has ushered in renewed cries from state representatives for oversight into both private equity and for-profit hospital owners.

When Prospect purchased Crozer for approximately $300 million in 2016, Prospect was owned by private equity firm Leonard Green & Partners.

Representatives for Delaware County noted that Crozer’s financial health declined while Prospect and Leonard Green got rich. In 2018, Prospect issued more than $400 million to Leonard Green investors, including $90 million for former Prospect CEO Sam Lee. Onlookers, including Malone, also questioned Prospect’s decision to sell Crozer’s real estate to hospital landlord Medical Properties Trust in a sale leaseback transaction.

At one point, Delaware County Memorial Hospital was paying $35 million in rent per year to the landlord due to the transaction, according to a Senate investigation into private equity’s impact on hospitals.

“Private equity’s decimation of Crozer is an abomination — the corporate abuse that our hospitals went through should be criminally illegal, and the investors and executives who did this to us should be held accountable,” said Pennsylvania Rep. Leanne Krueger in a statement on Monday.