For-profit company Prospect Medical Holdings, which owns hospital facilities in California, Pennsylvania, Rhode Island and Connecticut, filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Northern District of Texas.
The company said it plans to focus on its operations in California and sell Roger Williams Medical Center and Our Lady of Fatima Medical Center in Rhode Island and continue working with the Commonwealth of Pennsylvania to agree on terms for the sale of Crozer-Chester. Medical Center.
BECAUSE in Philadelphia reports that in an email sent to Crozer employees, Prospect CEO Von Crockett cited a number of challenges, including the “lingering impacts of the COVID-19 pandemic, inflation, a major cyberattack and the increase in health plan denials” as the impetus behind their decision.
The Crozer system had four hospitals at one time, but is now down to just two. WHYY reports that state officials and local lawmakers “have argued with hospital administration in recent years as Prospect cut services and rooms within Crozer.” WHYY said the bankruptcy will likely put a pause on the Pennsylvania Attorney General’s Office lawsuit, filed in October against Prospect, accusing the company of mismanagement and “corporate looting.”
CBS News reported that Prospect Medical’s bankruptcy comes less than a year after the bankruptcy of Steward Health Care, another major hospital system once backed by private equity. Along with Steward, Prospect Medical has been one of the focuses of a CBS News investigation revealing how private equity investors have siphoned hundreds of millions of dollars from community hospitals. CBS News said one of the similarities between Prospect Medical and Steward is that both relied on the value of their hospital’s real estate to help finance large payouts for their owners. The transactions, he said, resulted in onerous leasing agreements that diverted funds from direct patient care.
Prospect’s sale of three Connecticut hospitals to Yale New Haven Health has been stalled in court. CT mirror reports that Prospect-owned facilities in Connecticut (Waterbury, Rockville General and Manchester Memorial hospitals) have suffered financially and operationally over the past several years. “In August 2023, Prospect Medical Holdings suffered a debilitating cyberattack that crippled many of its facilities across the country. The following month, the presidents of Prospect hospitals in Connecticut warned the governor that the financial situation of the three hospitals was dire,” the Mirror noted.
The company emphasized that the Chapter 11 proceedings do not include PHP Holdings and its subsidiaries, including Prospect Health Plan Inc., Prospect Medical Systems LLC and their affiliated medical groups in California, Arizona and Texas, Gateway Medical Center and Foothill Regional Medical Center. . Its sale to Astrana Health is still expected to close in mid-2025.
