Prospect hospitals in Pennsylvania to close, lay off 2,651 workers

Crozer Health, a safety net health system with hospitals in eastern Pennsylvania, is shuttering operations at its remaining two hospitals and various outpatient locations. It is laying off 2,651 workers.[1]

Crozer’s parent company, Prospect Medical Holdings, filed for bankruptcy in January.[2] The bankruptcy court’s approval for Prospect to proceed in closing the Pennsylvania hospitals comes after a multiyear battle waged by elected officials, workers, and communities to keep the hospitals open after the system’s former private equity owner, Leonard Green & Partners, siphoned hundreds of millions in debt-funded dividends out of the system and sold off the real estate to hospital landlord, Medical Properties Trust, leaving the hospitals in poor financial condition.[3]

Crozer hospitals have struggled significantly in recent years. In 2022, Prospect/Crozer laid off hundreds of workers,[4] ended all hospital-based services at Springfield Hospital,[5] shuttered the maternity ward at Delaware County Memorial Hospital,[6] closed the hospice unit at Taylor Hospital,[7] and threatened municipalities with severing paramedic services in just 90 days if they didn’t pay up.[8]

In September 2022, Prospect announced it would permanently shut down Delaware County Memorial Health (DCMH), one of the hospitals in the Crozer Health system, and transition it to a behavioral health facility. The announcement sparked outrage in the Delaware County community, including by the nonprofit Foundation for Delaware County, which sued Prospect to keep the hospital open on the basis that when it converted Crozer Health from nonprofit to for profit status Prospect committed to keep the hospitals open for at least 10 years.[9]

Due to Prospect’s failure to adequately staff the emergency department, the state health department suspended emergency room services and patient admissions at Delaware County Memorial in November of 2022,[10] effectively closing the hospital. The Attorney General asked the court to hold Prospect in contempt for failing to address the staffing issues at the hospital. The Pennsylvania Supreme Court would ultimately rule in January 2025 for the hospital to stay open, but the decision came years too late.[11]

In 2024, Crozer lost accreditation for its surgical residency program, effectively ending it.[12] In August that year, it stopped providing surgeries at Taylor Hospital.[13]

That same month, Prospect-Crozer and CHA Partners announced a deal for CHA Partners to acquire the hospitals and convert them to nonprofit status.^[14] By October, CHA had pulled out of the deal, and on October 29, the Pennsylvania Attorney General (AG) filed a lawsuit against Prospect and its former investors, including Leonard Green and Partners, alleging that they violated the original 2016 asset purchase agreement by cutting services and closing facilities while diverting funds to private shareholders and investors.^[15] In an unprecedented move, the AG petitioned the court seeking state control of the hospitals.^[16] By January 2025 Crozer’s parent company, Prospect Medical Holdings, had filed for bankruptcy,[17] and by February, the bankruptcy judge had approved Crozer to be placed under receivership while the system searched for a buyer.[18]

Despite nearly $40 million provided to the ailing health system in recent months from the state, the county, the Foundation for Delaware County, and local provider groups, Crozer could not find a buyer for its hospitals.[19]

Crozer’s health facilities serve an estimated 200,000 people,[20] and the closures will have far reaching effects on healthcare access in the region, including reduced access to timely emergency services driven by longer emergency transport times and longer emergency room wait times at the two remaining hospitals in the region.[21] At an April 23 rally held outside of one of Crozer-Chester Medical Center, Crozer paramedic Bill McCall said, “People are going to die on the way to the hospital.”[22] Providers, elected officials, and paramedics have criticized the expedited closure which is supposed to be complete by May 2, arguing it creates greater risks to patients seeking care.[23]

Since the closure of Delaware County Memorial in 2022, area emergency rooms and EMS services had already been strained,[24] and the latest closures will lead to a further hollowing out of critical healthcare infrastructure in the region.

In March, Dr. Joyann Kroser, a Crozer physician testified to the Pennsylvania Senate Democrats Health Policy Committee, emphasizing the importance of Crozer’s healthcare infrastructure in the surrounding area:

“The loss of our health system would do unfathomable harm to our patients and to the community…Crozer has the only trauma center for Delaware County, has a renowned regional burn center and is a safety net health system for the underserved. In addition, we have the only behavioral health crisis center in our area and many patients with psychiatric emergencies depend on us.”

In anticipation of the closures, Delaware County issued an emergency declaration on April 21 to allow the county “greater flexibility in hiring, procurement, emergency medical services dispatch, and in tracking and potentially recouping expenses related to the ongoing hospital closures.”[25]

In a statement made on April 21, Pennsylvania Governor Josh Shapiro said that Prospect had “pillaged these hospitals for their own gain – and today, we see the result of their greed and mismanagement with the announced closure and loss of critical health care services for the people of Delaware County… we must ensure this never happens again by passing legislation to get private equity out of the health care business in Pennsylvania.”[26]

Peggy Malone,  a registered nurse at Crozer who leads the Crozer Nurses Association and has been an active voice in advocating for Crozer hospitals and patients, told Healthcare Dive, “I struggle with the fact that we save airlines and we help auto industries and weren’t able to save the hospital. That’s going to take me a long time to process.”[27]

Prospect’s bankruptcy

Prospect Medical Holdings filed for bankruptcy on January 11, 2025. A safety net hospital system with 16 hospitals across California, Connecticut, Pennsylvania, and Rhode Island,[28] Prospect was majority-owned by private equity firm Leonard Green & Partners from 2010 to 2021.[29]

Prospect’s chief restructuring officer, Paul Rundell, told the bankruptcy court that “Prospect’s financial distress started as a result of the decreased revenue and increased costs arising from the COVID-19 pandemic.”[30]

Rundell conveniently left out that Prospect collected at least $283.3 million in grants and loans from the federal government during the pandemic,[31] and that over the course of its ten-year ownership, Leonard Green and Prospect’s minority owners took approximately $658 million in fees and dividends from the safety net hospital chain in part by saddling it with debt and using the proceeds of the loans to pay themselves.[32] They collected this money out of Prospect even as many of its hospitals suffered deteriorating financial conditions.[33]   In July 2019, Prospect sold the real estate of its California, Connecticut, and Pennsylvania hospitals in a sale-leaseback transaction with Medical Properties Trust (MPT), a real estate investment trust, for $1.55 billion.[34]The transaction replaced debt with lease liabilities and left Prospect with fewer assets.^[35]

The burdensome rent and mortgage payments owed to MPT played a major role in Prospect’s bankruptcy.  As reported by Bloomberg, Prospect’s largest secured creditor in the bankruptcy is MPT, to which Prospect reportedly owed $1.7 billion in unpaid rent and loans as of January 2025.[36]

Rosemary Batt, a professor at Cornell University, told Axios in January that “Prospect Medical’s bankruptcy is just another in a stream of failures involving sale-leaseback agreements with REITs. Private equity firms enter into these agreements because the onerous conditions are put on the hospitals, while the PE firms will exit in a five-year window.”[37]

Prospect’s bankruptcy declaration also left out the fact that Leonard Green and Prospect had repeatedly told regulators and lawmakers who raised concern about Leonard Green’s extractive financial engineering not to worry.

In a July 2020 letter to Rep. David Cicilline, Leonard Green wrote: “We reject any implication that we have managed Prospect in a financially irresponsible fashion or that we have put our own financial interests ahead of the interests of the hospital system. Prospect today is at no risk of financial failure.”[38]

Similarly, in a letter to Rhode Island’s health department and office of the attorney general, Prospect wrote: “Contrary to PESP’s assertions, Prospect today remains extraordinarily well capitalized, faces no material financial challenges, and is at no risk of financial failure.”[39]

Prospect’s bankruptcy came on the heels of a damning report released by the Senate Budget Committee on January 7, in which the results of a year-long bipartisan senate investigation into Prospect were made public. The report highlighted how Leonard Green’s and Prospect’s “primary focus was on financial goals rather than quality of care at their hospitals, leading to multiple health and safety violations as well as understaffing and the closure of several hospitals.”[40] The report also notes that despite “financial and operational mismanagement” of the health system, Leonard Green took home $424 million of the $645 million Prospect paid out in dividends, leaving Prospect in “severe financial distress.”[41]

The devastating closures of Crozer hospitals in Pennsylvania should have been preventable. However, this tragedy is the unfortunate outcome of a policy landscape that allows profits to be put ahead of patients, and that allows private equity firms to extract hundreds of millions of dollars from safety net hospitals without consequence. Until policymakers decide to strictly limit or ban the debt-based extractive tactics that private equity investors use in healthcare, we will continue to see bankruptcies and hospital closures tied to private equity extraction.

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PESP has been sounding the alarm on private equity mismanagement at Prospect hospitals for several years through research and reports that document a pattern of extractive financial policies at the expense of patient care. Beginning in 2020 PESP has also written letters to state attorneys general, submitted state and federaltestimonies, provided public comment to institutional investors, and worked with unions and grassroots community organizations to elevate these issues.

For more resources from PESP on Prospect Medical Holdings and Leonard Green & Partners, click here.

[1] Vogel, Susanna. “‘I Lose Sleep over This Case’: Prospect Cleared to Close Crozer Health | Healthcare Dive.” Healthcare Dive, April 23, 2025. https://www.healthcaredive.com/news/prospect-medical-holdings-close-crozer-health/746117/; Dougherty, Tom, Kerri Corrado, Madeleine Wright, and Joe Holden. “Crozer Health Hospitals in Pennsylvania Are Closing, Prospect Medical Holdings Says – CBS Philadelphia.” CBS News, April 22, 2025. https://www.cbsnews.com/philadelphia/news/crozer-health-hospital-closing-news/.

[2] “Prospect Medical Bankruptcy Update – Delaware County Health Department – Delaware County, Pennsylvania.” Accessed April 24, 2025. https://delcopa.gov/health/pages/prospectmedicalbankruptcyupdate.html.

[3] See Bugbee, Mary. “Prospect Safety Net Hospitals Continue to Struggle under the Legacy of Leonard Green’s Past Ownership.” Private Equity Stakeholder Project (blog), November 8, 2023. https://pestakeholder.org/news/prospect-safety-net-hospitals-continue-to-struggle-under-the-legacy-of-leonard-greens-past-ownership/ and O’Grady, Eileen. “How Private Equity Raided Safety Net Hospitals and Left Communities Holding the Bag: A Case Study on Leonard Green & Partners’ Ownership of Prospect Medical Holdings.” Private Equity Stakeholder Project, November 2022. https://pestakeholder.org/wp-content/uploads/2022/11/Prospect_Primer_Nov-2022.pdf.

[4] Brubaker, Harold. “Crozer Health Layoffs Went Far Deeper than Initially Reported.” Philadelphia Inquirer, February 8, 2022, sec. Healthcare, business, health. https://www.inquirer.com/business/health/crozer-hospitals-layoffs-prospect-ceo-20220208.html.

[5] “Springfield Hospital.” Accessed April 24, 2025. https://www.crozerhealth.org/locations/springfield-hospital/.

[6] Cooper, Kenny. “Delaware County Memorial Hospital Closing Maternity Unit, Leaving 2 in the County.” WHYY, January 7, 2022.https://whyy.org/articles/delaware-county-memorial-hospital-to-close-maternity-unit-just-two-will-remain-in-the-county/.

[7]CBS News. “‘They Don’t Care’: Families Confused, In Pain After Delaware County Hospice Unit Announces Sudden Closure.” February 8, 2022. https://www.cbsnews.com/philadelphia/news/delaware-county-taylor-hospital-hospice-closing/.

[8] Cooper, Kenny. “Crozer Health Threatening to Shutter Paramedic Services for Delco Municipalities.” WHYY, April 15, 2022. https://whyy.org/articles/crozer-health-paramedic-services-delco/.

[9] WHYY. “Crozer Health, Prospect Sued over Plan to Close Delaware County Memorial Hospital.” Accessed October 24, 2022. https://whyy.org/articles/crozer-health-prospect-lawsuit-delaware-county-memorial-hospital-closure/.

[10] Perez, Walter. “Officials: Delaware County Memorial Emergency Dept. Closed Due to ‘Failure to Adequately Staff.’” 6abc Philadelphia, November 7, 2022, sec. health. https://6abc.com/delaware-county-memorial-hospital-emergency-department-closing-crozer-health-prospect-medical-holdings/12426002/.

[11] Cooper, Kenny. “Pa. Supreme Court Issues Ruling on Delaware County Memorial Hospital Closure.” WHYY, January 24, 2025. https://whyy.org/articles/pennsylvania-supreme-court-delaware-county-memorial-hospital-ruling/.

[12] Bjorkgren, David. “Crozer Health Loses Appeal and Its Surgical Residency Program.” DELCO.Today, July 1, 2024. https://delco.today/2024/07/crozer-surgical-residency-program-2/.

[13] Ashley, Madeline. “Crozer Health Displaces 30 Employees from Hospital OR amid Service Cuts | Becker’s.” Becker’s Hospital Review | Healthcare News & Analysis, August 29, 2024. https://www.beckershospitalreview.com/finance/crozer-health-displaces-30-employees-from-hospital-or-amid-service-cuts/.

[14] Condon, Alan. “Prospect Medical Plans to Sell Crozer Health.” Becker’s Hospital Review, August 8, 2024. https://www.beckershospitalreview.com/hospital-transactions-and-valuation/prospect-medical-plans-to-sell-crozer-health.html.

[15] Condon, Alan. “Pennsylvania AG Sues Health System for ‘mismanagement and Neglect’ of Hospitals.” Becker’s Hospital Review, October 30, 2024. https://www.beckershospitalreview.com/legal-regulatory-issues/pennsylvania-ag-sues-health-system-for-mismanagement-and-neglect-of-hospitals.html.

[16] Brubaker, Harold, and Sarah Gantz. “Crozer Health May Be Placed into State Control, an Unprecedented Move after Years of Financial Turmoil.” The Philadelphia Inquirer, October 29, 2024, sec. Health, health, health. https://www.inquirer.com/health/crozer-health-delaware-county-pennsylvania-20241029.html.

[17] Owens, Caitlin. “A Second Hospital Chain Bankruptcy Draws More Private Equity Scrutiny.” Axios, January 15, 2025. https://www.axios.com/2025/01/15/prospect-bankruptcy-private-equity.

[18] Vogel, Susanna. “Crozer Health Placed into Receivership after Proposed Deal Collapses | Healthcare Dive.” Healthcare Dive, February 6, 2025. https://www.healthcaredive.com/news/crozer-health-prospect-medical-receivership-fti-consulting-bankruptcy/739563/.

[19] Muoio, Dave. “Prospect’s Crozer Health to Begin Shutting down Hospitals.” FierceHealthcare, April 21, 2025, sec. Fierce Healthcare Homepage,Finance,Hospitals. https://www.fiercehealthcare.com/providers/prospect-medicals-crozer-health-hospitals-close-march-14-without-miracle-deal.

[20] O’Connell, Chris. “Crozer Health Remains Open after Receiving $6 Million Donation in Short-Term Funding.” FOX 29 Philadelphia, April 10, 2025. https://www.fox29.com/news/crozer-health-remains-open-after-receiving-6-million-donation-short-term-funding.

[21] Southwick, Ron. “How Crozer Health’s Closure Will Impact a Pennsylvania County.” Chief Healthcare Executive, April 23, 2025. https://www.chiefhealthcareexecutive.com/view/how-crozer-health-s-closure-will-impact-a-pennsylvania-county.

[22] Cooper, Kenny, and Nicole Leonard. “Crozer Health Confirms Delco Hospital Closure Plans in Bankruptcy Court.” WHYY (blog), April 23, 2025. https://whyy.org/articles/crozer-health-closure-hospital-staff-reaction/.

[23] See Rep Leanne Krueger. “Crozer Closing Hearing Update,” April 22, 2025. https://www.pahouse.com/Krueger/News/?id=138251 and 6abc Philadelphia. “Crozer Health Hospital Emergency Rooms Stop Accepting Patients,” April 23, 2025. https://6abc.com/post/crozer-health-hospital-emergency-rooms-stop-accepting-patients/16228691/; delcopa.gov. “Delaware County Issues Emergency Declaration Regarding Prospect Medical Holdings – Delaware County, Pennyslvania,” April 21, 2025. https://delcopa.gov/publicrelations/releases/2025/prospectbackruptcystatment2.html.

[24] Lapook, Jonathan, Michael Kaplan, and Samu. “‘This Really Hit Hard’: Pennsylvania Hospital Shutdown Strains Health Care Delivery, First Responders Say – CBS News.” CBS News, April 24, 2023. https://www.cbsnews.com/news/pennsylvania-hospital-shutdown-strains-health-care-delivery-first-responders-say/.

[25] delcopa.gov. “Delaware County Issues Emergency Declaration Regarding Prospect Medical Holdings – Delaware County, Pennyslvania,” April 21, 2025. https://delcopa.gov/publicrelations/releases/2025/prospectbackruptcystatment2.html.

[26] Mitman, Hayden. “Crozer Health Ceasing Operations, More than 2,600 Workers to Be Laid Off.” NBC10 Philadelphia (blog), April 21, 2025. https://www.nbcphiladelphia.com/news/local/crozer-health-closing-prospect-medical-holdings-delaware-county-pennsylvania-hospital-layoffs-chester-taylor-hospital/4165169/.

[27] Vogel, Susanna. “‘I Lose Sleep over This Case’: Prospect Cleared to Close Crozer Health | Healthcare Dive.” Healthcare Dive, April 23, 2025. https://www.healthcaredive.com/news/prospect-medical-holdings-close-crozer-health/746117/.

[28] “Hospital Locations | Prospect Medical Holdings, Inc.” Accessed January 12, 2025. https://www.pmh.com/locations/hospital-locations/.

[29] PE Hub Staff, “Leonard Green Buying Prospect Medical,” PE Hub (blog), August 16, 2010,  https://www.pehub.com/leonard-green-buying-prospect-medical/

[30] See pg. 6 of “Declaration of Paul Rundell in Support of Debtors’ Chapter 11 Petitions and First Day Pleadings.” Us Bankruptcy Court for the Northern District of Texas Dallas Division, January 13, 2025.

[31] O’Grady, Eileen. “After Paying $658 Million in Dividends and Fees to Investors, Prospect Medical Holdings Received $283 Million in Federal COVID-19 Aid.” Private Equity Stakeholder Project, August 4, 2020. https://pestakeholder.org/news/after-paying-658-million-in-dividends-and-fees-to-investors-prospect-medical-holdings-received-283-million-in-federal-covid-19-aid-2/.

[32] Eileen O’Grady, “UPDATE: Leonard Green-Led Ownership Collected $658 Million in Dividends and Fees from Prospect Medical Holdings despite Challenges, Commitment to Regulators to Forgo Dividends” (Private Equity Stakeholder Project, May 2020),  https://pestakeholder.org/wp-content/uploads/2020/05/UPDATE-Leonard-Green-Prospect-Medical-Dividends-PESP-051420.pdf

[33] “Decision Re: Initial Application of Chamber Inc.; Ivy Holdings Inc.; Ivy Intermediate Holdings, Inc.; Prospect Medical Holdings, Inc.; Prospect East Holdings, Inc.; Prospect East Hospital Advisory Services, LLC; Prospect CharterCARE, LLC; Prospect CharterCARE SJHSRI, LLC; Prospect CharterCARE RWMC, LLC” (State of Rhode Island Office of the Attorney General, June 1, 2021), 37,  https://riag.ri.gov/sites/g/files/xkgbur496/files/documents/Prospect_Chamber_Ivy_AG_HCA_Decision.pdf

[34] “Prospect to Receive $1.55 Billion Investment from Medical Properties Trust, Inc.,” July 15, 2019. https://www.businesswire.com/news/home/20190715005786/en/Prospect-to-Receive-1.55-Billion-Investment-from-Medical-Properties-Trust-Inc.

[35] “Consolidated Financial Statements for the Years Ended September 30, 2019 and 2018” (Prospect Medical Holdings, December 2019),  44, https://pestakeholder.org/wp-content/uploads/2020/06/PMH-Financial-Statement-2018-2019.pdf

[36] Ma, and Jonathan Randles. “Prospect Medical Faces Landlord Brawl, Cash Burn in Bankruptcy.” Bloomberg, January 15, 2025. https://www.bloomberg.com/news/articles/2025-01-15/prospect-medical-faces-landlord-brawl-cash-burn-in-bankruptcy.

[37] Owens, Caitlin. “A Second Hospital Chain Bankruptcy Draws More Private Equity Scrutiny.” Axios, January 15, 2025. https://www.axios.com/2025/01/15/prospect-bankruptcy-private-equity.

[38] Leonard Green & Partners letter to Rep. David Cicilline, July 17, 2020.

[39] Prospect Medical Holdings letter to Office of Health Systems Development and Office of the Attorney General, July 20, 2020.

^[40] “Profits Over Patients: The Harmful Effects of Private Equity on the U.S. Health Care System.” Senate Budget Committee Bipartisan Staff Report, January 2025, 118th Congress. Pg. iii.

^[41] “Profits Over Patients: The Harmful Effects of Private Equity on the U.S. Health Care System.” Senate Budget Committee Bipartisan Staff Report, January 2025, 118th Congress. Pg. iv.