“Legal Theft”: PESP breaks down private equity’s role in Crozer’s collapse at a Delaware County, PA Council meeting

Last month,Mary Bugbee, Healthcare Director at PESP, presented to the Delaware County Council about the devastating impact of private equity practices on the Crozer Health system. Her presentation, “Raiding the Safety Net: How Private Equity Extraction Led to the Closure of Crozer Health,” detailed how Leonard Green & Partners, a Los Angeles-based private equity firm, and its minority owners extracted over $650 million from the hospital system.

Through financial maneuvers such as debt-funded dividends and sale-leaseback agreements, Prospect Medical Holdings, acquired by Leonard Green & Partners in 2010, was drained of resources. Mary’s presentation highlighted how these practices enriched the firm’s owners while leaving hospitals burdened with long-term debts and reduced assets. Leonard Green exited in 2021, having siphoned out $437 million, leaving behind a healthcare system facing closures of emergency rooms, shuttered services, and a decimated infrastructure.

“Private equity didn’t just fail this community—it exploited it,” said Council Vice Chair Richard Womack. “They drained a once-thriving hospital system of its resources, its workforce, and its integrity.” Council Chair Dr. Monica Taylor added, “What we saw in Delaware County is part of a broader national strategy: extract wealth, leave liabilities, and move on. It’s asset-stripping dressed up in financial jargon.”

The presentation from Mary also included case studies from Prospect’s operations in Texas and Connecticut, where similar patterns of private equity extraction led to hospital closures and the hollowing-out of services. She also noted how Prospect’s bankruptcy is not an outlier, but part of a larger pattern in which current and former private equity-backed companies account for a disproportionate amount of recent healthcare bankruptcies.

Mary called for regulatory reforms to prevent such exploitation, including limits or bans on extractive practices used by private equity, such as dividend recapitalizations and sale-leasebacks, and requirements for greater transparency from hospitals and their parent companies. After the presentation, Council Member Elaine Paul Schaefer emphasized the need for systemic reform, stating, “We can’t allow this to happen again—not here, not anywhere.”

The presentation was well received by residents in attendance, several of whom voiced support for further investigations and reforms.

A catalogue of PESP’s research on Prospect Medical Holdings and Leonard Green & Partners can be accessed here.