The Attorney General of Pennsylvania has taken the unprecedented move to ask a Delaware County court to give the state control of financially troubled Crozer Health, documents filed with the Court of Common Pleas show.

The petition says Crozer’s owner, Prospect Medical Holdings Inc., has notified state officials of its intention to close major service lines after Nov. 20. “If permitted, a suspension of major service lines will clearly cause immediate and irreparable harm. as Crozer-Chester Medical Center would likely not survive,” the AG’s motion states.

The lawsuit follows years of turmoil for the county’s largest health care provider, owned for profit since 2016. Two of Crozer’s four hospitals have closed, and the system has suffered numerous rounds of layoffs. Public hospital inspectors are called to Crozer facilities for safety issues and complaints almost twice as often as at other area hospitals.

The Attorney General has the legal authority to intervene to protect healthcare assets. In Crozer’s case, the state’s goal is to protect access to health services in an area without other nearby hospitals and to serve a community where many people cannot afford health insurance private.

If Crozer-Chester, which has the county’s only trauma center and its sister facility, Taylor, in the event of a closure, the closest hospitals would be Riddle Hospital in Media and Mercy Fitzgerald between Darby and Lansdowne. They are almost 10 miles away in parts of the county increasingly crowded by residential and commercial development.

Other options were available when Hahnemann University Hospital in the city center and Delaware County Memorial Hospital in Crozer closed. In both cases, nearby hospitals were able to treat displaced patients.

The AG intends to appoint a management company to manage Crozer’s facilities, which, in addition to the two hospitals, include outpatient clinics in Broomall and Glen Mills and an outpatient surgery center in Havertown. Crozer also provides outpatient medical services at Springfield Hospital, which is no longer admitting patients for longer stays.

The petition to bring in Crozer receivership does not resolve its financial problems. Crozer-Chester Medical Center is a safety net provider to Chester and the healthcare system as a whole has relatively few patients with private insurance, which pays better rates than government-funded Medicare and Medicaid programs. This makes it difficult for Crozer to be profitable.

Crozer’s liabilities include a $155 million mortgage from Medical Properties Trust, its former owner; an estimated pension liability of $100 million or more; and many millions more are needed to modernize obsolete facilities and equipment. Any organization that took over Crozer would need at least some of those responsibilities cleared.

The Pension Benefit Guaranty Corp., a federal agency that supports bankrupt pensions, last month filed a $12 million lien against Crozer for failure to make required payments.

A history of security issues

Amid its financial woes, Crozer struggled to meet state and federal standards for quality and safety.

Crozer-Chester and Taylor were the only hospitals in the Philadelphia area to receive a Rating D from the national level hospital safety ranking organization Leapfrog last year. THE rating was based on 2021 and 2022 dataand at the time Anthony Esposito, CEO of Crozer Health, said did not reflect improvements to the security protocol.

But inspection reports from the Pennsylvania Department of Health show that Crozer’s deficiencies continue to put patients at risk:

Health inspectors visited Crozer-Chester and Taylor hospitals 27 times in 2023 – more than twice as often as any other Philadelphia-area hospital – to investigate possible safety issues or check whether hospitals had resolved past problems. The hospital was cited for bags of biohazard waste piled up on the loading dock, delaying urgent medications for hours and allowing a nurse to work without a Pennsylvania license.

So far this year, hospitals have been cited for leaving physically restrained patients for too long without monitoring them, only to be unable to provide the heart attack services they advertise due to broken equipment, for not monitoring cardiac patients and for not having a criminal history. checks new staff members.

Taylor Hospital received one of the most serious warnings in the state in February, after a behavioral health patient considered a risk to herself left the hospital without her shoes or phone and disappeared for several days.

And in August, inspectors cited the health system for taking hours to review CT scans of emergency stroke patients, delaying urgent care.

Inspectors visited the two hospitals 23 times in mid-September.

Crozer abruptly stopped its kidney transplant program in January 2023 and rushed to enter into partnerships with other health systems to continue providing core hospital services, such as trauma and neurological care.

A new chapter

The AG’s request for receivership would open a new chapter in the painful recent history of Crozer, which has closed two hospitals since 2022 and recently reduced services at Taylor Hospital at Ridley Park. Crozer-Chester has the only trauma center in Delaware County, but it relies on Temple Health for cardiothoracic surgery and Jefferson Health for stroke care.

Prospect announced a preliminary agreement in August for sell Crozer to CHA Partners LLCa New Jersey real estate company specializing in purchasing hospital properties and redeveloping them into mixed-use medical facilities.

CHA committed to financially cleaning up Crozer and integrating it into a larger nonprofit health system, which happened after CHA took over the former Memorial Hospital in Salem County, New Jersey in 2019.

However, Crozer is far more complicated than Salem, and fixing its finances will require help from the government, private health insurers and the real estate company that holds the mortgage on Crozer’s property, industry experts say. The CHA’s efforts to muster such support appear to have stalled.

The History of Prospect in Delaware County

Crozer endured years of financial difficulties and a long period of searching for a buyer as the former nonprofit Crozer Keystone Health System. In 2016, its four hospitals were sold to Prospect in a deal valued at $300 million. Los Angeles private equity firm Leonard Green & Partners was Prospect’s majority shareholder at the time.

» LEARN MORE: A timeline: Crozer Health since Prospect acquired it in 2016

In the early years, Prospect’s ownership of Crozer showed promise for growth with the hospital admissions are increasing and neuroscience services expanded. But during the financial crisis caused by COVID-19 and afterward, Crozer’s business declined precipitously.

A series of financial maneuvers added to the financial pressure on Crozer.

Prospect borrowed $1.12 billion in 2018 to pay down debt and pay a $457 million dividend to its owners, Leonard Green & Partners, as well as individual owners, Prospect executives Sam Lee and David Topper .

Lee and Topper plunged Prospect into an even deeper financial hole the following year when they sold most of the company’s real estate holdings to an Alabama real estate investment company, Medical Properties Trust Inc. (MPT) , for $1.4 billion.

The terms of the MPT real estate sale, described as a leaseback, required Prospect to pay rent on the buildings it owned.

Crozer’s properties were valued at $420 million and required the health system to pay $35 million in annual rent, which it could not afford after the pandemic strained health systems’ finances reducing demand for cost-effective services, such as non-emergency services, and increasing costs.

MPT now values ​​the Crozer properties at $155 million, about a third of what it paid for it.

This is a developing story and will be updated.