Los Angeles-based Prospect Medical Holdings, a private equity-backed company that recently filed for Chapter 11 bankruptcy protection, intends to sell Crozer Health to a not-for-profit consortium of healthcare operators, according to a Jan. 31 news release.
Prospect will seek federal bankruptcy court approval Feb. 6 for the proposed sale of Upland, Pa.-based Crozer Health, which includes all of its operating assets — hospitals, ASCs, clinics and physician offices.
The company did not disclose the members of the consortium interested in acquiring the Crozer system. However, Delaware state Sen. Tim Kearney told NPR affiliate WHYY News that the buyer would be a nonprofit entity responsible for running the hospital system.
"We're at a point now where there's a general agreement on that — but again, there's always devils in the details and there's obviously money issues that need to be sorted out," he said.
According to the release, the consortium plans to continue Crozer Health's physician training programs and support for community health initiatives. The sale is subject to final documentation, and Prospect Medical intends to file the necessary paperwork with the bankruptcy court.
Prospect Medical, which operates facilities in California, Pennsylvania, Rhode Island and Connecticut, filed for Chapter 11 protection Jan. 11, reporting over $400 million in debt. The company, which has a portfolio of more than 11,000 physicians, said it will continue normal operations despite its financial difficulties.
According to a filing by Chief Restructuring Officer Paul Rundell, the company faced reduced revenue and rising costs due to the COVID-19 pandemic. Additionally, supply chain issues, increased expenses and a slower recovery of outpatient visits compared to pre-pandemic levels exacerbated its financial distress.
The for-profit system initially signed a letter of intent to sell the four-hospital system to CHA Partners in August 2024. That plan collapsed in October, according to WHYY.
Since Prospect acquired Crozer in 2016, the health system has reduced services significantly. Crozer is losing $160 million a year, according to The Philadelphia Inquirer.