Crozer wasn’t the first Pennsylvania hospital system to be kept open with state money
Pennsylvania also gave cash to keep Sharon Regional Hospital open near the Ohio border. Here's how that turned out.
Pennsylvania and Delaware County officials recently made an unusual decision to provide $20 million to keep financially struggling Crozer-Chester Medical Center and Taylor Hospital open during their owner’s bankruptcy.
It wasn’t the first time that Pennsylvania has pledged public money to mitigate the collapse of a private equity-backed hospital company.
Last fall, Pennsylvania provided $4.5 million from September through November to keep Steward Health Care, in another high-profile bankruptcy case, from closing Western Pennsylvania’s Sharon Regional Medical Center.
Plus, the state paid $600,000 for an emergency repair.
It wasn’t enough.
After the state had absorbed Sharon’s losses for three months, Steward demanded that Pennsylvania commit to providing $3 million a month starting in December to keep the 163-bed facility open, the state Attorney General’s Office said in a December bankruptcy court filing.
Otherwise, Steward was going to close the 125-year-old hospital, the filing said. And that’s what happened.
Steward filed its closure notice on Dec. 16, and the hospital closed three weeks later. That was five days before the bankruptcy filing by Prospect Medical Holdings, which owns Crozer-Chester and Taylor.
The turmoil in communities on opposite ends of Pennsylvania — Sharon on the Ohio border between Pittsburgh and Erie and Crozer in Pennsylvania’s southeast corner — are examples of the fallout of local hospital ownership by national companies that have been lambasted by elected officials and community leaders for prioritizing their own profits.
What’s next for Sharon
In Sharon, a buyer emerged and is working to reopen the hospital, with the financial assistance from local foundations, municipalities, and the hospital’s landlord, Medical Properties Trust, which wants to keep collecting rent.
The buyer is a nonprofit formed by Tenor Health Partners, a Pasadena, Calif., for-profit company that describes itself as a hospital turnaround firm. Tenor paid $1.9 million, according to the New Castle News.
Tenor’s founder is Radha Savitala, an attorney who used to work for Prime Healthcare Inc., a for-profit company that owns three hospitals in the Philadelphia region, according to Tenor’s website. Savitala told local news media last week that a “soft opening” might happen as soon as last Friday.
This week, the company was still waiting on licensing from the state Department of Health, according to local news reports.
If Tenor succeeds in reopening and successfully operating Sharon Regional, that would be a rare accomplishment.
It hasn’t happened in more than a decade at least in Southeastern Pennsylvania, according to Inquirer coverage. The state health department did not respond to a request for examples of hospitals elsewhere that reopened.
A similar scenario at Crozer?
Prospect Medical Holdings has been saying for weeks that it was running out of money to keep open Delaware County’s Crozer-Chester Medical Center in Upland and Taylor Hospital in Ridley Park, which serve a low-income area without easy access to other health-care options.
While demanding $20 million in government money to keep the hospitals open for 30 days, Prospect has been touting an imminent sale to a consortium of nonprofits. It has not named any organizations in the group.
State and county officials agreed to provide the money as long as Prospect agreed that a temporary manager, known as a receiver, would take control of Crozer’s hospitals and doctors offices for 30 days.
The bankruptcy judge overseeing Prospect’s case agreed to that arrangement on Feb. 6.
During that hearing, Prospect’s lead bankruptcy attorney said obstacles remained to the sale of Crozer to an unidentified consortium of local nonprofit health systems.
“There are some steps that need to be taken, and hopefully will be taken over the next 30 days to make that sale more viable,” said Thomas R. Califano, of Sidley Austin.
The management firm acting as a receiver, FTI Consulting, arrived at Crozer Feb. 10 and has been working to make sense of Crozer’s finances, according to doctors who are not authorized to speak publicly about Crozer.
What will happen after 30 days is unclear. Prospect previously has closed two other Crozer hospitals in Springfield and Drexel Hill.
» READ MORE: Crozer Health since Prospect acquired it in 2016: A timeline
Prospect’s lead bankruptcy attorney, Thomas R. Califano, said in court last week that he expected to be back in front of the judge regarding Crozer’s remaining two hospitals before the 30 days are up.
“Hopefully, for a sale,” bankruptcy Judge Stacey Jernigan said quietly.
State Rep. Leanne Krueger, a Democrat whose district includes Crozer-Chester, in a Feb. 11 message to constituents summarized the situation at the health system now under the control of FTI.
“Despite previous announcements from Prospect and Crozer about a sale, the system has not yet been sold,” she said. “I am cautiously optimistic that we have avoided the disorderly closure that elected officials have been working at all levels to prevent.”