Crozer Health in Pennsylvania under Prospect

analysisThe Supreme Court of Pennsylvania records that on January 8, 2016 Prospect acquired Delaware County Memorial Hospital and other assets from Crozer-Keystone Health System (now CKHS, Inc.) under an asset purchase agreement whose recitals expressed an intent to keep providing key services to vulnerable populations. PMH's chief restructuring officer dates the acquisition of Crozer-Keystone, Delaware County's largest employer and health care provider, to July 2016; Prospect CCMC LLC signed a recognition agreement with the nurses' union on June 16, 2016 and took over Crozer-Chester Medical Center on July 1, 2016. The Commonwealth Court quotes Section 11.16 of the agreement, under which the buyers may not sell or close any of the licensed hospitals for ten years after the effective time, subject to exceptions including a sale or closure required by a government entity; Delaware County's government describes it as a ten-year clause restricting closures. The agreement itself is not retained. ^{1 2 3 4 5}

analysisA nonprofit research report stated that Prospect committed $56.6 million to establish the Crozer-Keystone Community Foundation but initially paid $32.9 million, and that in November 2017 an arbitrator ruled that Prospect still owed the foundation $23.7 million; the award is not retained. On February 26, 2020 the Third Circuit (Nos. 19-1439 and 19-1440) affirmed the refusal to vacate an arbitration award for the Crozer-Chester nurses' union: Prospect CCMC, having assumed its predecessor's collective bargaining agreement, had to let nurses keep vacation time accrued above 200% of the annual limit. ^{6 2}

analysisCKHS, Inc. and The Foundation for Delaware County sued PMH and Prospect Crozer, LLC to stop the conversion of Delaware County Memorial Hospital, and on October 11, 2022 the Delaware County Court of Common Pleas granted them a preliminary injunction, with the Attorney General's office joining on their side. On November 4, 2022 the Department of Health ordered PMH and Prospect Crozer to suspend emergency services and banned admissions at the hospital from November 7, 2022 because its failure to provide adequate diagnostic imaging was jeopardising patients' health and safety; the Connecticut Attorney General's draft complaint attributes the closure to understaffing, while the court record identifies inadequate imaging. On May 3, 2023 the Commonwealth Court (No. 1118 C.D. 2022) granted PMH and Prospect Crozer's appeal, in which Prospect challenged the finding of irreparable harm, and reversed the injunction. On January 22, 2025 the Supreme Court of Pennsylvania (Nos. 117 and 118 MAP 2023) reversed the Commonwealth Court, holding that it had misapplied the standard of review and that the record contained apparently reasonable grounds for the trial court's injunction, and remanded for further proceedings. ^{1 2}

analysisThe December 2023 Senate Budget Committee letter states that in 2022 PMH suspended all services at the hospital, including the community's sole emergency room, and said it intended to convert it into a 100-patient behavioral health facility; that in March 2023 Crozer Health laid off 215 workers after reports that it could not pay vendors on time; and that after a lawsuit by the Pennsylvania Attorney General PMH agreed to sell its stake in Crozer Health. A litigation schedule filed with the Chapter 11 plan supplement lists a case in the Eastern District of Pennsylvania in which Prospect DCMH LLC, doing business as Delaware County Memorial Hospital, challenges the termination of the hospital's Medicare provider agreement by the Secretary of Health and Human Services. On February 9, 2024 the same court dismissed a pro se complaint against PMH, Samuel Sang-Bum Lee, Leonard Green & Partners and others concerning a patient's death at the hospital, for lack of a federal claim or established diversity jurisdiction, with leave to file an amended complaint. ^{3 4 5}

analysisOn October 28, 2024 the Pennsylvania Attorney General's office sued PMH, Prospect Crozer, LLC, Leonard Green and Partners and two PMH directors, alleging mismanagement and neglect of Crozer Health and breaches of the purchase agreement, including cutting services, closing facilities and failing to fully fund pension accounts for Crozer Health retirees, and seeking the appointment of a receiver. That account of the allegations comes from PMH's chief restructuring officer; the defendants' answer is not retained. On October 31, 2024 the case, naming Prospect Crozer, PMH, David Topper, Samuel Lee and Leonard Green and Partners, was removed to the U.S. District Court for the Eastern District of Pennsylvania (No. 2:2024cv05853); Leonard Green and, on November 25, 2024, Lee and Topper filed notices consenting to removal, and the Attorney General moved to remand. The retained docket, last retrieved on December 16, 2024, ends with a stipulated order setting January 9, 2025 for oppositions to the amended remand motion; no merits ruling appears in it. On January 31, 2025 the debtors filed an emergency motion (Docket No. 332) to approve the private sale of the Pennsylvania hospitals free and clear of interests and a settlement among the debtors, the Attorney General, Lee and Topper under Bankruptcy Rule 9019. They withdrew it, and in their April 21, 2025 closure and sale supplement they stated that no viable bidder, operator or funding source had emerged for the hospitals as a whole. ^{1 2 3}

analysisOn April 21, 2025 the debtors stated that, without any viable bidder, operator or third-party funding source, they had to begin closing the Pennsylvania hospitals while marketing the ambulatory surgery and imaging sites and owned real estate. On April 23, 2025 the bankruptcy court approved the closure of certain Pennsylvania hospitals and sale procedures; on July 3 it approved the sale of the ambulatory surgery and imaging sites, and on August 6, 2025 the abandonment of certain hospitals and the sale of others. The debtors' October 13, 2025 notice reported that after an auction on October 10 Chariot Allaire Partners LLC was the buyer of Crozer-Chester Medical Center for $10,000,000 and Restorative Health Foundation and Syan Investments the buyers of Springfield Hospital for $3,000,000, with Medical Properties Trust, Inc. consenting to both sales. ^{1 2 3}

analysisDelaware County's government, which describes Prospect's conduct as years of mismanagement and financial exploitation, published its own status account: Crozer-Chester Medical Center closed on April 30, 2025 and Taylor Hospital on April 26, 2025; KQT Aikens Partners bought Taylor Hospital in September 2025, the Upper Darby School District bought Delaware County Memorial Hospital in August 2025, and Chariot Equities with Allaire Health Services bought Crozer-Chester in January 2026, while ChristianaCare bought Prospect's Crozer outpatient sites at auction in May 2025 and a first buyer of Springfield Hospital failed to close. ⁴