Following several days of negotiations and the threat of being found in contempt of court, the Foundation of Delaware County (Delco Foundation) has agreed to give an additional $13 million to help keep Crozer Chester and Taylor hospitals open for business.
Meanwhile, talks continue regarding a possible sale of Crozer Health to a group led by Penn Medicine and Delaware County, a deal that reportedly involves state funding and “other sources.”
Earlier this month, the foundation sent $7 million to the receiver handling the finances of bankrupt hospital owner Prospect Medical Holdings. That covered hospital payroll for two weeks and came shortly after a $20-million taxpayer-funded bailout from Pennsylvania.
A second $7 million deposit will hit the receiver’s bank account this week, with the rest by the beginning of April.
“This allows all of the parties to focus on the actual important issue here, which is keeping these hospitals open and moving towards our long-term solution,” William Curtin, an attorney for Prospect’s debtors, said at a hearing on Monday in a North Texas federal bankruptcy courtroom.
The mood at Monday’s meeting was far different from the last time the two sides met.
Tensions flared after a March 19 ruling from a Pennsylvania judge that the foundation could not provide further financial assistance. That followed a lawsuit by Delco Foundation trustee Donald Delson.
Attorneys representing Prospect and its debtors accused Delco Foundation of purposefully violating a court order giving the federal bankruptcy court exclusive jurisdiction. “To pull the rug out from the Debtors mere days before a decision must be made on the future of the Pennsylvania Hospitals is unconscionable,” the attorneys wrote.
Federal bankruptcy Judge Stacey Jernigan agreed and ordered all sides back to the negotiating table.
That discussion, which included Pennsylvania Attorney General Dave Sunday and Delaware County officials, apparently worked out. Curtin said Monday he considered “the foundation issue” resolved.
Foundation officials defended the hesitancy to commit more cash, despite netting $50 million when Prospect bought the health system in 2016.
Delco Foundation President Frances Sheehan told the court she hoped the “investment [in the hospital] will bear fruit.”
She remained worried about the nonprofit’s future. Sheehan said the foundation still has $30 million in lease obligations involving office buildings on the Springfield Hospital campus. Those leases were supposed to be part of the sale of the Crozer Health System to Prospect but the buildings’ owner refused to transfer them.
“[We need] to address these long-term obligations so that as a community foundation, we can address the many challenges our community faces,” said Sheehan.
She added the foundation has a responsibility to provide the hospitals a lifeline and hope to see a successful, long-term resolution.
Critics, including union representatives, have raised questions about Delco Foundation’s spending choices.
In 2023, the Delco Foundation fund had more than $74 million cash on hand.
Documents show the foundation used some of the money for healthcare causes. But other cash was used for art and music programs, including a $16,000 grant to the Media Arts Council. Thousands of dollars went to an arboretum, to fund school supplies, and to the Chester Community Coalition “to build peace for those impacted by violence.” More than $68,000 went to economic developments.
Foundation officials regularly defended the donations as following the will of their donors. They also cited the expanding definition of healthcare.
One expense the foundation didn’t mention on Monday was the $764,353 total spent on the annual salaries of Sheehan and three other executives.
The union representing several Crozer Health employee groups released the salary information last week. Sheehan made $264,592, while Chief Information Officer Joanne Craig brought in $188,726. Vice President Laura Delafavia brought in $171,605 and Monika Collins, the foundation’s vice president in Philadelphia, made $139,430.
Union leadership accused the foundation of holding up a deal to keep the Crozer Health System open.
However, that deal could still be reached before the end of the month.
An asset purchase agreement has been drafted, and the state Attorney General’s Office is hopeful it could be finalized this week.
No details have been released about the plan, but all sides appear confident.
“It sounds like we’re on the verge of breathing a sigh of relief that that there’s a long term solution here,” said Jernigan.
