Federal judge signs agreement to place Crozer Health in receivership for 30 days to avoid hospital closures
A federal judge in Texas signed off on an agreement on Thursday that places the Crozer Health system in receivership for 30 days.
The agreement will remove its parent company, Prospect Medical Holdings, and place an independent monitor to manage the health system and keep all services going.
"Crozer Health looks forward to working constructively with the Commonwealth of Pennsylvania and FTI Consulting to ensure that our communities continue to receive uninterrupted access to the critical health services they require," Anthony Esposito, the CEO of Crozer Health, said in a statement. "As always, we remain focused on providing high-quality and personalized care to our patients, and will continue to uphold that commitment throughout this process."
Attorneys for Prospect and the Pennsylvania Attorney General reached a deal late Wednesday night.
"Today's extension of Crozer's operations would not be possible without the leadership of Governor Shapiro and the tireless work of the Office of the Attorney General under David Sunday," the Delaware County State & Legislative Delegation and Delaware County Council said in part in a joint statement. "Their involvement in this case has been critical to keeping Crozer going in the midst of this national bankruptcy."
After 30 days, attorneys for Prospect said they hope a sale to a health consortium, initially announced last week, can be finalized.
A prosecutor with the Attorney General's Office told the court this is the best-case scenario. The receiver will obtain $20 million to fund the health system through the next month. It had been warned the Crozer system was in a dire financial situation.
The judge said this temporary solution avoids immediate and irreparable harm.
The news comes after Prospect, a Los Angeles-based company, filed for Chapter 11 bankruptcy last month. The for-profit company owns facilities in California, Pennsylvania, Rhode Island, and Connecticut and has listed debts of more than $400 million.
County sources have said they've been working to try and stabilize the health care provider, while at the same time, developing contingency plans should the hospitals close.
After Prospect filed for bankruptcy, lawmakers said in January that they would "fight like hell" to keep Crozer open.
In December, a water main break flooded an electrical room leading to the evacuations of dozens of patients as electrical transformers arced and caught fire. Sources confirmed to CBS News Philadelphia Investigators the hospital is still powered by a generator as the transformers will have to be replaced.
Chester Mayor Stefan Roots said in January that the hospital is vital to the city's residents because of its trauma center.
"Crozer has been the star in the Crozer system for so long," he said. "To see it in the condition it's in right now, it's unthinkable."
