(The Center Square) – The closure of Crozer-Chester Hospital in Delaware County has brought new scrutiny onto the role of private equity across the state’s healthcare landscape, with many fearing that allowing hospitals to be pushed into shareholder models risks the longevity of an already struggling system.
“This is a simple story about greed. Prospect Medical Holdings came to town, bought Crozer, broke our health care system, and paid themselves hundreds of millions of dollars to do it,” said Dr. Monica Taylor, Chair of the Delaware County Council.
Gov. Josh Shapiro has announced a $1 million investment in maintaining emergency medical services in the Chester area while advocating for the legislature to pass new legislation aimed at reining in private equity.
“We cannot allow for-profit companies to treat our hospitals like piggy banks they can smash and walk away from,” said Shapiro. “We’ve taken action to help those affected — but to protect communities across our Commonwealth, we need to take real action and change the laws that allow private equity to raid our healthcare system and threaten Pennsylvanians’ livelihoods.”
On Wednesday, Sen. Tim Kearney, D-Media, and Rep. Lisa Borowski, D-Newtown Square, announced companion bills in the Senate and House that would equip the attorney general’s office to better protect the interests of patients in its oversight of hospital system mergers and acquisitions.
The bill specifically would “grant the Office of the Attorney General expanded authority to review mergers, acquisitions, and other major financial transactions involving health systems, prohibit healthcare sale-leaseback agreements by private equity firms, require healthcare entities to submit detailed financial and operational disclosures before completing major transactions, and allow deals to be evaluated on a case-by-case basis.”
“Crozer’s tragedy has shown us exactly how damaging unchecked corporate greed can be,” said Kearney. “When private equity is allowed to run rampant through our healthcare system, communities like Delaware County are left with closed hospitals, lost jobs, higher healthcare costs, and limited options to turn to for emergency care. We owe it to every Pennsylvanian to make sure this never happens again.”
Last legislative session, a package of bills intended to address the issue did not make it to a vote. They included a for-profit hospital purchase moratorium, prohibition of new for-profit hospitals, state oversight of health system change in ownership, a minimum severance package for mass layoffs, prevention of exploitive real estate splits, and a moratorium of dividends after health system acquisitions.
In the case of Crozer, the attorney general’s office did appoint a receiver when equity firm Prospect Medical Holdings tanked the hospital, but help came too late. Despite efforts from a coalition of local and state legislators and organizations, and an infusion of over $15 million from the state, the region lost its primary trauma center.
It’s cost over 3,000 jobs, and according to doctors, it’s already costing lives.
“I’ve seen hearts restarted, and gunshot victims resuscitated. This is a place where miracles have occurred, and where they should occur still. But Prospect Medical Holdings ran this hospital into the ground,” said former Crozer emergency physician Dr. Max Cooper. “The day after we closed our trauma unit, we had a young man shot just a block from where we stand today. And he died 20 minutes into his 30-minute drive to Lankenau Hospital. If Crozer were open, we could have saved him. We’ve saved others just like him countless times before.
Borowski expressed optimism that the legislative outcome could be different this year, especially with mounting pressure from constituents who are left searching for care and jobs in the wake of closures.
“This is one of those pivotal moments for us as lawmakers elected by the people to represent their interests. How we choose to respond to the crisis private equity firms are inflicting on our healthcare system will speak volumes to Pennsylvanians about our courage to do what’s right,” said Borowski.
