Prospect Medical wants to ‘abandon’ Delaware County Memorial and Taylor hospitals
The move comes after Prospect received such low offers for the two Crozer hospitals that their sale would bring no value to the bankruptcy estate.
Prospect Medical Holdings wants to jettison from its bankruptcy case two Crozer Health hospitals that the California for-profit company has shuttered in Delaware County.
Prospect has received top offers of $1.25 million for Delaware County Memorial Hospital in Drexel Hill and $575,000 for Taylor Hospital in Ridley Park, according to a filing in its bankruptcy case.
Because those offers are so much less than the property tax claims asserted by local authorities, Prospect now wants to abandon the properties, and filed a motion seeking approval in bankruptcy court Friday.
The carrying costs are too high to justify keeping them as part of the bankruptcy estate, Prospect said.
If a bankruptcy judge in Texas approves the abandonment at a hearing next Monday, that would stop the clock on the accumulation of additional bankruptcy liabilities. Ownership of the buildings would not change. A lender could foreclose on the properties.
The filing did not mention Crozer-Chester Medical Center in Upland, Crozer’s largest hospital, which Prospect closed in May. It is also for sale.
Prospect’s motion to abandon Delaware County Memorial and Taylor noted that property tax claims at Delaware County Memorial are $19.74 million and $7.67 million at Taylor.
Delaware County officials did not respond to a request for comment.
Crozer also faces an additional $660 million in unsecured claims from vendors and other creditors, according to Prospect’s filing.
For years, Prospect has been fighting the assessments, which are linked to the inflated prices used in 2019 when Prospect raised more than $400 million from the sale of its Delaware County properties to Medical Properties Trust as part of a much larger deal under which Prospect leased the Crozer properties back from the real estate company.
The 2019 deal valued Delaware County Memorial at $124.5 million, property records show. The assessed value of the hospital that has been closed since late 2022 is $108 million. Upper Darby School District had expressed interest in acquiring the hospital next to its high school.
At Taylor, the assessment is $60 million, likely based on an attributed value of $70.8 million in the 2019 deal. Taylor closed in April.
Even before Prospect filed for bankruptcy protection in January, Delaware County officials, Pennsylvania Gov. Josh Shapiro’s office, and local health systems tried to find a new operator for Crozer in the face of Prospect’s closure threats. Those efforts failed because no long-term financial backstop for the new operator could be established.
Now the county and towns are scrambling to replace services, including mental health crisis response and emergency medical response.