DAILY NEWS CLIP: October 30, 2024

Prospect Medical Holdings sued over Crozer Health management


Modern Healthcare – Tuesday, October 29, 2024
By Caroline Hudson

Pennsylvania Attorney General Michelle Henry filed a civil lawsuit Tuesday against Prospect Medical Holdings for its alleged mismanagement of Crozer Health facilities.

The attorney general’s office is seeking a preliminary injunction to preserve existing service lines and the appointment of a receiver to manage Crozer’s facilities until a new owner is secured, Henry said at a Tuesday press conference.

The lawsuit, filed in the Delaware County Court of Common Pleas, alleges for-profit operator Prospect Medical did not adhere to a 2016 asset purchase agreement that required it to keep Crozer’s four hospitals open for at least a decade and to avoid any substantial cuts to services.

Los Angeles-based Prospect Medical suspended inpatient and emergency services at Crozer’s Springfield Hospital in 2022 and closed Delaware County Memorial Hospital that same year due to lack of staffing. Prospect may also cut some services at Crozer-Chester Medical Center, Henry said.

“We know that this is the beginning, but we’re ready for this fight,” Henry said. “Our legal action shows how corporate greed has severely harmed Delaware County’s largest healthcare provider, its patients, its staff and the community.”

The lawsuit raises questions about Prospect Medical’s plan to sell Crozer to real estate company CHA Partners. Under the letter of intent announced in August, Crozer would transition to nonprofit status. Prospect said in October 2023 it would find a buyer within a year, and the attorney general’s office agreed to pause ongoing litigation against Prospect to let it concentrate on potential transactions.

A CHA spokesperson declined to comment.

Prospect Medical said CHA has not withdrawn from the proposed deal, and it is working toward an agreement with Pennsylvania Gov. Josh Shapiro(D for additional funding to maintain services during the sale process.

“Today’s hasty, ill-considered, and completely unnecessary action by the Office of the Attorney General will only serve to harm Crozer Health and reduce healthcare access for patients in the communities we serve,” Prospect said in a statement.

Crozer has struggled with rising staffing and supply costs and said last year it was losing millions of dollars each month. The Upland, Pennsylvania-based system laid off employees in 2023 as part of an organizational restructuring. ChristianaCare in Wilmington, Delaware, backed out of a proposed deal to acquire Crozer in 2022.

“Our focus is keeping the two Crozer hospitals — Crozer-Chester and Taylor Hospital — open, staffed and fully functional,” Henry said. “We are taking this aggressive action before it is too late.”

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