Private Equity Firm Plunders Hospital Acquisition in Delaware County, Pennsylvania

Crozer Health, a hospital system in Delaware County, Pennsylvania, is facing financial turmoil after being acquired by a private equity firm. The firm, Prospect Medical Holdings, financed by Leonard Green & Partners, has reportedly siphoned nearly half a billion dollars from Crozer in the last five years. This has led to layoffs, service cuts, and late bill payments, causing concern among the community.

The recent layoffs of 215 workers, representing 4 percent of the workforce, have raised alarms about the future of healthcare in the region. Additionally, plans to end drug and alcohol treatment at the flagship teaching hospital in Chester have sparked outrage, especially in a community with high poverty and substance abuse rates.

Crozer’s struggles are not unique, as many community hospitals in low- and moderate-income areas have been targeted by private equity firms looking to make quick profits. The financial maneuvers by Prospect Medical, including a sale and leaseback deal that burdened the hospitals with high rents, have left the health system vulnerable and on the brink of bankruptcy.

Efforts are being made to protect other hospitals from similar fates, with legislation proposed in Pennsylvania to give state officials more oversight over hospital acquisitions. Rhode Island has set an example by giving its attorney general and health department veto power over such transactions, ensuring that the public interest is prioritized.

As Crozer Health teeters on the edge, the community is left wondering about its future. With the healthcare landscape evolving rapidly, the need to safeguard essential services for underserved communities has never been more critical. The fate of Crozer Health serves as a cautionary tale of the risks involved when private equity firms prioritize profits over patient care.