Crozer-Chester Medical Center and Taylor Hospital are closing, owner Prospect says

Crozer Health’s owner, Prospect Medical Holdings, filed a bankruptcy notice Monday saying it is closing Delaware County’s Crozer-Chester Medical Center and Taylor Hospital.

California-based Prospect said the ambulatory surgery and imaging centers in Glen Mills, Broomall, Haverford, and Media will remain open, pending a sale of those operations.

A bankruptcy hearing on the closure plans is scheduled for 2:30 p.m. Tuesday.

Prospect planned to start the closure process immediately, according to a presentation obtained by The Inquirer. Emergency departments will go on divert Wednesday morning.

Hospital patients at Crozer-Chester expected to stay more than five days will be transferred. Those with shorter stays will be able to remain in the Upland facility until they are discharged.

At Taylor Hospital in Ridley Park, patients expected to stay more than two days will be transferred to Crozer-Chester. Others will be discharged, according to the plan.

The closure of two of the four remaining hospitals in Delaware County is expected to leave many residents without easy access to many of the health-care services provided by Crozer, especially in communities around Chester. Of particular concern are trauma services and health services for women and babies, including high-level neonatal intensive care.

Prospect, a for-profit company, acquired Crozer in 2016 in a deal valued at $300 million, then leveraged Delaware County’s largest health-care system for investors’ financial gain.

Two years later, Prospect borrowed $1.12 billion to pay off debt and issued a $457 million dividend to its owners, Leonard Green & Partners, as well as to individual owners, Prospect executives Sam Lee and David Topper.

In eight years of ownership, Prospect shut down two other Crozer hospitals, reduced medical services, and laid off employees in several rounds of cutbacks. Crozer was saddled with liabilities that helped to deter other local health systems from getting involved in a state proposal to create a new independent nonprofit to own it.

Crozer said in February that the system employed more than 3,000 people. Most are expected to lose their jobs.

» READ MORE: Crozer Health after Prospect acquired it in 2016: A timeline

Delaware County issued an emergency declaration Monday in response to the closure of Crozer-Chester and Taylor, said Monica Taylor, the chair of the Delaware County Council.

Though the closure has long been expected, Taylor said, poor communication by Prospect since declaring bankruptcy earlier this year and the company’s refusal to set a closing date months in advance in accordance with state law hampered the county’s ability to prepare.

“Prospect has not been a good player in this process,” Taylor said. “They’ve actually been fairly difficult in trying to really have those conversations about different service lines and what is needed to transition it to other systems.”

More than a dozen Delaware County municipalities, including Chester and Upper Darby, depend on Crozer for EMS services, which they will lose with the closure of the hospital.

The county is looking for stopgap measures to provide EMS services to those municipalities while they find solutions. In the meantime, Taylor said, the emergency declaration will give county 911 operators more flexibility to triage how they dispatch emergency vehicles as fewer are available.

The emergency declaration will allow the county to adjust staffing levels to support Crozer in closing operations, Taylor said.

Bill Dennon, the mayor of Upland, called the loss of Crozer devastating.

“I’m outraged about it, I’m really mad,” said Dennon, a Republican. “This isn’t supposed to happen, a hospital is not supposed to be closing.”

At an April 10 bankruptcy court hearing, Prospect had said the University of Pennsylvania Health System had agreed to assume the real estate and equipment leases in Broomall and Glen Mills in exchange for what was described as a $5 million donation and asset purchase.

But now Prospect says it intends to continue operating outpatient locations in Broomall, Glen Mills, Haverford, and Media while it tries to sell them to the highest bidders, according to a bankruptcy filing. Bids are due Friday, and an auction will be held Monday, if there is more than one qualified bidder. That plan requires bankruptcy court approval.

Prospect rejected Penn’s offer last week, Penn said in a letter Monday to elected officials in Delaware County.

“We are deeply disappointed by this decision. Patients will be adversely impacted and many talented health-care professionals will be displaced at a time when health-care needs in the community are only increasing,” the letter said.

A Prospect filing noted that Penn’s $5 million payment to Crozer was contingent on the deal for Broomall and Glen Mills being completed.

The Pennsylvania Attorney General’s Office told Prospect Thursday that no one was willing to take over Crozer’s hospitals and that “there was no hope,” Prospect’s filing said.

Lawyers for Prospect have been saying since the company filed for bankruptcy protection in January that it needed to close the facilities because they lose too much money.

Three rounds of funding — providing about $40 million from the state, Delaware County, and the Foundation for Delaware County — kept the system going under the oversight of FTI Consulting, a management firm picked by the Pennsylvania Attorney General’s office.

Leaders of the foundation, an independent nonprofit dedicated to community health needs, said they have no regrets about the $20 million it put into the effort to save Crozer. The foundation board and staff felt strongly that ”we should do everything possible to assist during this critical time,” foundation president Frances Sheehan said.

FTI Consulting said in a statement it was “disappointed an alternative resolution and sale could not be reached.” Prospect had started putting FTI’s restructuring plan for Crozer into effect, announcing an agreement for Main Line Health to assume Crozer-Chester’s labor and delivery services, for example.

The Attorney General’s Office and the administration of Pennsylvania Gov. Josh Shapiro had been working for more than two years to get Crozer, Delaware County’s largest health system and a major employer, under nonprofit ownership.

One idea was that a group of local nonprofit health systems would support a new nonprofit that would acquire Crozer. It’s not clear that support for that model extended beyond Penn. Negotiations along those lines stalled because terms could not be reached on the amount of liability the new owner would have to assume.

Both Shapiro and Attorney General Dave Sunday said in statements Monday that they would do what they can to hold Prospect accountable for the loss of Crozer.

“We will continue to work through the bankruptcy process to pursue the Commonwealth’s financial claims to the greatest extent possible in order to hold Prospect accountable for actions that caused this closure,” Sunday said.