Shapiro, Pa. leaders, former Crozer Health staff promote bills to limit private equity in health care
In the wake of the closures of Crozer-Chester Medical Center and Taylor Hospital in Delaware County, Pennsylvania, state leaders are pushing to limit private equity companies' influence on health care in the state.
The two hospitals closed in recent weeks after their owner, Prospect Medical Holdings, declared bankruptcy. Multiple infusions of cash from the state, county and local health systems kept the hospitals open a little longer, but ultimately, Crozer-Chester's last day open was May 2, after Taylor Hospital closed April 26.
Over 2,000 health care workers lost their jobs and the county is now down to two hospitals, Riddle and Mercy Fitzgerald.
The closures have already led to lives lost, according to Dr. Max Cooper, a former emergency room physician at Crozer for over seven years.
A day after the hospital closed, a young man was shot in the chest a block away, Cooper said.
"He should have been seen by my partners and I in the emergency department just over my shoulder. But because we are closed, EMS had to transport him 30 minutes away to Lankenau Hospital. And 20 minutes into that trip, his heart stopped, and he died," said Cooper.
Prospect was the focus of a CBS News investigation detailing how private equity investors siphoned hundreds of millions of dollars from community hospitals. The company was controlled from 2010 to 2021 by private equity firm Leonard Green & Partners, which held a majority stake. Leadership of the firm were issued a $457 million dividend in 2018, including $90 million going to the CEO Sam Lee and $257 million to shareholders.
Gov. Josh Shapiro pointed out that Prospect closed multiple facilities in recent years.
"If you look back over the past three years, Prospect has closed four hospitals in Delaware County. Like I said, their motive is to make a quick profit, nothing more."
Shapiro and other leaders spoke in favor of bills in the Pennsylvania legislature that would limit private equity influence on health care.
One is the would allow the Pennsylvania Attorney General and Department of Health to review transactions to purchase hospitals before they go through.
The bill from Democratic Rep. Lisa Borowski, who represents Delco, would also prohibit leaseback agreements by private equity firms. A similar is titled "Protecting Healthcare Institutional Sustainability from Harmful Deals."
Cooper said he supported both bills.
"We cannot let this catastrophe happen again," Cooper said. "We must prevent the next Crozer ... we must have additional tools at our disposal to prevent this from happening again."
Officials say Crozer was ruined by private equity ownership that stopped investing in its facilities and scaled back services.
Leaseback agreements were the subject of a suit filed last year by former Attorney General Michelle Henry. The suit alleged Prospect sold its hospital properties and then began paying $35 million in rent to Medical Properties Trust.
Leaseback transactions "pad investor dividends while burdening patients, employees, their families, and the broader community," Henry's office said in 2024.
Prospect had called the suit "hasty" and "completely unnecessary."
The Pennsylvania Department of Labor and Industry is working to help the 2,600 hospital employees who were laid off.
This is a developing story and will be updated.
