PHILADELPHIA (KYW Newsradio) — Prospect Medical Holdings, the company that runs Crozer-Chester and Taylor hospitals in Delaware County, has filed for Chapter 11 bankruptcy.
Prospect claims it is losing $11 million a month keeping Crozer-Chester Medical Center in Upland open. The company blamed the lingering effects of the pandemic, inflation, and changing patient demographics for its troubles and said Chapter 11 will allow it to prioritize its core hospital business in California.
In 2018, private equity firm Leonard Green & Partners, which held a controlling stake in Prospect at the time, issued a $457 million dividend, paying CEO Sam Lee $90 million and shareholders $257 million.
Pennsylvania’s attorney general filed a lawsuit against the company in October, accusing it of mismanaging and neglecting the health system. That case is ongoing.
The Delaware County State Legislative Delegation said they plan to bring forth legislation to further empower the attorney general when critical institutions are mismanaged.
“Across our commonwealth, there is a growing number of health care deserts … Crozer health system is the latest in the pattern of private equity coming in and looting our communities of necessary health care and jobs,” state Rep. Lisa Borowski said.
The company said it will continue to negotiate with Pennsylvania officials on terms of the sale of the Crozer location. Taylor and Crozer will remain open through the bankruptcy process.