Crozer Health’s Delaware County hospitals get a short-term reprieve after six-hour meeting Sunday

Crozer-Chester Medical Center and Taylor Hospital are receiving short-term funding that will keep them open past Friday, which is when bankrupt owner Prospect Medical Holdings said it would no longer pay the 3,200 doctors, nurses, and others who work for Delaware County’s largest health-care provider.

The Foundation for Delaware County agreed to provide an undisclosed amount of money to prevent Crozer’s immediate closure, which was expected in the coming week, according to a joint statement from the Pennsylvania Attorney General’s Office and the foundation.

“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 in the statement, which did not say how long Crozer could remain open under the agreement, hammered out during a six-hour meeting in Harrisburg.

Foundation president Frances Sheehan said: “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. While we cannot sustain an entire health system, we remain committed to ensuring continued access to care.”

The joint statement did not address a long-term solution for Crozer. Attempts to put the system into a new nonprofit backed by local health systems have so far not succeeded because of concern that the system would come with $60 million or more in liabilities that the new entity would have to absorb. That’s on top of cash operating losses that topped $58 million from Oct. 1 through Jan. 31.

The Media foundation is an independent nonprofit that received $55 million from the sale of the former nonprofit Crozer Keystone Health System to Prospect in 2016 and is supposed to use that money to support the health and well-being of Delaware County residents. It has no legal obligation to keep the hospitals open.

But last week, after Prospect said in court that it was starting the closure process, the foundation came under intense pressure from Gov. Josh Shapiro, other local elected officials, the Crozer nurses’ union, and even the bankruptcy judge to provide money to keep Crozer open beyond March 14 — even though there’s no long-term operator ready to take over.

In addition to representatives from the AG’s office and the foundation, Sunday’s meeting included people from the governor’s office, a consultant who has been scrutinizing Crozer’s finances, Prospect lawyers and management, and a company that owns two medical office buildings adjacent to Springfield Hospital, which is closed to inpatients.

The governor’s office and the AG’s office did not answer questions from The Inquirer Sunday about whether officials had tried to get money for Crozer from Sam Lee and David Topper, two Prospect owners and executives who collected $160 million in dividends funded by debt that was loaded onto Prospect hospitals, including those in Delaware County.

As the legal successor to Crozer’s former nonprofit owner, the foundation has spent years fighting Prospect in court, starting from day one to force Prospect to pay the foundation what was owed under the sale agreement.

The 2016 sale agreement required Prospect to keep the Crozer hospitals open for 10 years, unless it got approval from a community advisory committee to close them. The foundation sued Prospect for breach of contract when the company closed Delaware County Memorial Hospital in Drexel Hill in 2022 without that consent.

The foundation is liable if Prospect doesn’t pay rent and taxes on two Springfield Township medical office buildings that are leased through September 2029. That liability could be as much as $30 million, the foundation has said. An attorney for the owner of those two buildings, Ventas, a large real estate investment trust, was also asked by the the bankruptcy judge to participate in Sunday’s meeting by video.