A Michigan for-profit hospital company named as possible purchaser of bankrupt Crozer Health
Insight Health recently took over operations at two of bankrupt Steward Health Care's Ohio hospitals.
A Michigan for-profit company known for taking over financially distressed hospitals was named in a bankruptcy filing last week as a possible purchaser of Delaware County’s Crozer Health.
Insight Health System’s reputation was described recently as “Ambulance Chasers of Totaled Hospitals” in an article headline in the American Prospect, which describes itself as a publication for progressive perspectives on public policy.
Insight was founded by neurosurgeon Jawad Shah in Flint, Mich., and has since expanded to Chicago, where in 2021 it acquired a hospital for $1 from Trinity Health. Last fall, the company was picked by landlord Medical Properties Trust to take over two Ohio hospitals from bankrupt Steward Health Care.
Houlihan Lokey, an investment bank trying to sell Prospect Medical Holdings’ properties, including Crozer, named Insight as a potential buyer of Crozer-Chester Medical Center in Upland and Taylor Hospital in Ridley Park in a filing last Tuesday on how much it would get paid under various sales scenarios.
Dayne Walling, director of public policy and government relations for Insight, declined to comment Wednesday. Prospect public relations officials did not respond to a request for comment on the possibility of a sale to Insight.
A bankruptcy filing Monday described a settlement of wide-ranging claims Prospect and Medical Properties Trust (MPT) have asserted against each other. The document says Prospect will cooperate with Crozer bidders that are designated or supported by MPT. If no transaction is acceptable to state officials, “MPT consents to the wind-down and closure of the operations,” the filing says.
Prospect acquired Crozer in 2016 as part of a national expansion from its California base when it was owned by private-equity firm Leonard Green & Partners, which extracted money from Crozer and other health systems by selling real estate to Medical Properties Trust and loading the hospitals with debt.
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Insight’s appearance on the scene comes as the administration of Pennsylvania Gov. Josh Shapiro and the state Attorney General’s office have been struggling to persuade local nonprofits to take on Crozer, which serves a vulnerable population in an area of Delaware County that doesn’t have easily accessible alternatives.
Pennsylvania and Delaware County provided $20.2 million early this month to keep Crozer open for 30 days under a temporary manager. On Wednesday, Delaware County Council approved a $6.6 million payment to the temporary manager. The money came from a behavioral health block grant for services already provided. The remainder of the county’s $9.8 million total contribution is from money already set aside for behavioral health services at Crozer.
It’s not unusual for operators like Insight, which experts say typically don’t have enough money in their businesses to successfully operate hospitals long term, to show up at bankruptcies looking for a chance to take over.
That’s what happened in 2019 during the Hahnemann University Hospital bankruptcy. A family that owned Pontiac General Hospital in Pontiac, Mich., wanted to buy Hahnemann to reopen it after it closed gradually that summer, but didn’t have enough money to submit an acceptable bid.
That group had a connection to Insight founder Shah. Shah invested in and was on the board of Pontiac General, which filed for bankruptcy protection again in November after federal regulators stripped it of its Medicare funding because of violations of staffing and other regulations.
Walling, Insight’s spokesperson, did not respond to a question about whether Shah is still on the Pontiac board.
Like the Michigan group that tried to buy Hahnemann out of bankruptcy, Insight tried to bid on Steward Health Care’s Massachusetts hospitals, but was deemed unqualified, the company told the Boston Globe.
In Warren, Ohio, Medical Properties Trust, Steward’s landlord, was able to persuade the judge overseeing Steward’s bankruptcy to allow Insight to begin running Trumbull Regional Medical Center and Hillside Rehabilitation Hospital last fall.
Last March, the board of CarePoint Health in North Jersey hired Insight, with Shah as CEO, to manage the financially ailing three-hospital system. Shah resigned abruptly eight months later, and the system filed for bankruptcy protection soon after.
Insight said in a CarePoint bankruptcy filing last month that it is owed more than $200 million for deferred management fees, money that it advanced to CarePoint, liabilities it assumed from CarePoint, and damages from CarePoint’s breach of contract both before and after the bankruptcy.
Editor’s note: This story was updated with new information from court filings and on Delaware County’s financial contribution to keeping Crozer open.