Crozer Health saved from closure in last-minute deal
PENNSYLVANIA, UNITED STATES — It was a last-minute save for Crozer Health, Delaware County’s largest health network, which had been on the brink of shutting down. Prospect Medical Holdings, the for-profit company that owns the struggling healthcare system that treats more than 10,000 people in southeastern Pennsylvania, reached an 11th-hour agreement to keep the hospital system running for the time being up to Sunday, March 9.
Financial crisis and bankruptcy proceedings
The for-profit company Prospect Medical Holdings, which purchased Crozer Health in 2016, informed a Texas federal bankruptcy court on March 6 that it only had enough money to continue operations through March 14. The company has since filed for Chapter 11 bankruptcy on January 11 after the state’s attorney general sued in October 2024, accusing the company of mismanagement and neglect.
It would have shut down Crozer-Chester Medical Center in Chester, Taylor Hospital in Ridley Park, and many outpatient facilities and doctors’ offices, affecting some 3,000 employees and tens of thousands of patients in the region.
Outsourcing in healthcare as a possible answer
The Crozer Health crisis took place at a time when the healthcare outsourcing market was growing rapidly. As healthcare systems fall into bankruptcy, many are trying to use outsourcing as a way to cut costs, increase the effectiveness of operations, and meet the shortage of employees.
Outsourced specialized solutions for revenue cycle management, telehealth support, and administrative functions might be the answer that financially troubled healthcare systems like Crozer need to avoid shutting down. Using this model, healthcare providers can reallocate operational expenses to more vital areas, such as patient care, since they can cut costs by 60% to 70%.
As Frances Sheehan, President of the Foundation for Delaware County, said in her statement about requiring “a long-term solution with a nonprofit provider,” the industry is moving away from for-profit models, which have shown to have difficulties in sustaining themselves as well as providing good patient care.
Emergency intervention provides temporary solution
In Harrisburg, a bankruptcy judge convened a six-hour negotiation session that resulted in key stakeholders agreeing to keep the health system running. This is so they can look for a more permanent restructuring. The Foundation for Delaware County had to provide crucial funding to cover the immediate gaps that could have led to the closure.
“I am pleased that the parties focused on how to move forward on behalf of Pennsylvanians, instead of how we got here, and worked to an agreement after more than six hours of negotiations,” Attorney General Dave Sunday said.
“This work was done on behalf of the thousands of people and families who depend on Crozer Health System for essential services — and the many hardworking professionals who provide that care.”
For the time being, the court-appointed receiver, FTI Consulting, will run the hospital system while officials figure out what to do in the long term.
Sheehan offered a cautious optimism: “We are encouraged by this outcome and hopeful it will lead to a long-term solution with a nonprofit provider. For three years, we have advocated for the residents of Delaware County, supporting negotiations and exploring every available option to keep the healthcare system from closing.”
To keep residents up to date on the status of Prospect-owned hospitals and the bankruptcy, Delaware County officials have set up a dedicated webpage at DelcoPA.Gov/Prospect. Residents can also dial the Delaware County Health Department Wellness Line at (484)-276-2100 for other resources and information.
