As Delco struggles with Crozer’s closing, Shapiro pushes for limits on private equity in healthcare

On the lawn of the now-closed Crozer-Chester Medical Center, Gov. Josh Shapiro called Thursday on the Pennsylvania General Assembly to pass legislation limiting private equity’s future role in healthcare — a play to prevent what the governor described as predatory practices that decimated one of Delaware County’s essential healthcare institutions.

Minutes after the news conference wrapped, as reporters, public officials, and former Crozer employees were still chatting in the area, a car arrived at the hospital’s drive seeking emergency care for a baby.

Attendees watched as first responders assisted placing the child in an ambulance to be transported to another hospital — a dramatic scene that underscored the consequences Crozer’s shuttering has had in the community. A woman yelled that this was the result many had worried about.

At the beginning of the event, Peggy Malone, president of the Crozer-Chester Nurses Association, had warned that the hospital’s closure would result in the death of shooting victims, mothers giving birth far outside their community, and behavioral health patients wandering the streets.

“Communities suffer,” she said.

After filing for bankruptcy earlier this year, hospital owner Prospect Medical Holdings closed the doors at Crozer-Chester Medical Center and Taylor Hospital in Delaware County at the beginning of May. The closures put hundreds of staff members out of work, and are expected to expand wait times for EMS in the county and leave a major gap in healthcare resources in one of the most populated areas in Delaware County.

Shapiro blamed Prospect for the closure, arguing that executives at the California for-profit company had stripped the hospital of its resources, profiting while ultimately failing the community that relied on it.

He urged lawmakers to pass a bill that would allow the state attorney general to intervene to stop healthcare sales and mergers deemed harmful to the public interest and block firms from selling hospital real estate and leasing it back, which happened at Crozer.

“I am done letting private equity wreak havoc on our healthcare system,” he said Thursday.

In a statement late Thursday after this story published, Prospect pushed back on Shapiro’s narrative, contending the company had “negotiated and collaborated in good faith” to seek a path to keep Crozer Health open.

“The outcome is extremely unfortunate and we are continuing to work to provide support for our patients and team members,” the statement said.

The Democratic governor also announced $1 million in funding to help fund EMS services across communities that had relied on Crozer. Those dollars, Delaware County Council Chair Monica Taylor said, will go toward stopgap measures the county has already enacted and an effort to station an ambulance outside Crozer-Chester Medical Center for several more weeks.

Pennsylvania House lawmakers are expected to vote on the private equity bill, which is backed by State Rep. Lisa Borowski (D., Delaware) and State Sen. Tim Kearney (D., Delaware), next month. It is the latest attempt to rein in private equity’s role in healthcare after the policy stalled in the GOP-controlled state Senate last year.

While the legislation would not save Crozer, Shapiro and the lawmakers said they hoped reforms could prevent similar situations across the state.

Kearney, who has long championed the legislation, said he believed the tide was turning in favor of the policy after Shapiro included the reforms in his budget address in January. Details of the proposal, he said, were still being worked out, with a key factor being continued opposition of the Hospital and Healthsystem Association of Pennsylvania (HAP), which opposed a wider-reaching version of the bill last year. The policy had extended the AG’s power to nonprofit hospitals as well as private firms.

“We have to figure out the politics of it,” he said. “The very good can’t stand in the way of the perfect.”

In a statement, Nicole Stallings, the CEO of HAP, said the organization was reviewing the bill and appreciated the “thoughtful approach” lawmakers had brought to it. The association called for addressing the root causes of financial concerns hospitals are facing — namely, expenses that exceed revenue and low reimbursement from the government-funded Medicaid program for low-income residents and those with disabilities.

“The way that we make sure that this doesn’t happen again, and that hospitals can remain open and maintain essential services their communities depend on, is by addressing the structural financial challenges that put access to care at risk,” Stallings said.

Those financial challenges may only get worse as House Republicans in Washington have proposed cuts to Medicaid to pay for tax cuts championed by President Donald Trump, Shapiro noted. Hospitals, especially in rural and low-income areas, rely heavily on Medicaid reimbursements.

Shapiro warned the cuts could lead to more closures.

“You’re exacerbating the healthcare crisis that’s brewing in our commonwealth,” Shapiro said, urging federal lawmakers to seriously consider the consequences of the proposal.

“This will devastate Pennsylvania and many other states, and I hope our federal elected officials do the right thing and oppose these Medicaid cuts.”