The health system is hoping to have finally found a new owner for its four hospitals in CHA Partners.
Prospect Medical Holdings’ winding history with Crozer Health may be coming to an end.
After acquiring Crozer-Keystone Health System for $300 million in 2016, struggling to keep it financially viable, and falling short on a sale in 2022, Prospect has now signed a letter of intent with real estate and development company CHA Partners to divest the four-hospital system.
As part of the deal, Crozer, which switched to for-profit when it was bought by Prospect, will revert to nonprofit status under CHA.
In the announcement, CHA said it will work closely with consulting firm Healthcare Preferred Partners over the next several months to complete the transaction, which will require a definitive agreement and regulatory review.
Since being founded in 2008, CHA has acquired five hospitals in New Jersey, including “successfully transitioning one of its hospitals back to a not-for-profit status and integrating it into a large regional healthcare network,” the news release said. CHA also owns and operates ambulatory surgery centers, medical office buildings, and skilled nursing/assisted living facilities.
“We believe this is a positive step for our physicians, employees and the communities we serve, and will help secure Crozer Health’s future as a critical healthcare provider in Delaware County,” the announcement said.
Prospect previously tried to sell Crozer to ChristianaCare Health System in 2022 before talks fell apart. The two sides said at the time that “the economic landscape has significantly changed, impacting the ability of the sale to move forward."
Later that year, Prospect said it would close Delaware County Memorial Hospital and reopen it as a behavioral health hospital, which prompted a lawsuit from the Foundation for Delaware County and the state attorney general.
This past October, all sides agreed to suspend litigation for 270 days as Prospect searched for another buyer for Crozer that would allow it to operate as a nonprofit.
Prospect is also attempting to divest hospitals in other markets and encountering several roadblocks.
The health system is dealing with a lawsuit brought on by Yale New Haven Health after the two sides agreed to a $435 million sale of three Connecticut hospitals owned by Prospect. Yale alleged that Prospect breached their contract pattern by subjecting the hospitals to “irresponsible financial practices, severe neglect and general mismanagement.”
Meanwhile, Prospect was given 40 conditions to meet by Rhode Island Attorney General Peter Neronha to complete the sale of two safety net hospitals to The Centurion Foundation. The requirements include Prospect paying unpaid bills owed by the two hospitals’ operator, CharterCARE Health Partners, totaling $24 million.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Prospect Medical Holdings signed a letter of intent to sell Crozer Health to real estate firm CHA Partners, which would allow Crozer to operate as a nonprofit.
Prospect has tried to offload Crozer since 2022 and is also struggling to divest hospitals in Connecticut and Rhode Island.
CHA Partners’ history includes acquiring five hospitals in New Jersey, as well as owning and operating ambulatory surgery centers, medical office buildings, and skilling/assisted living facilities.