The start of April was supposed to bring more clarity about the future of Crozer Health’s facilities in Delaware County.
Instead, a federal bankruptcy judge in North Texas postponed Tuesday’s hearing because a planned purchase agreement had yet to go through.
“We continue to work around the clock to get to a solution,” said William Curtin, an attorney representing the debtors of hospital owner Prospect Medical Holdings.
Curtin told bankruptcy Judge Stacey Jernigan there was only so much he could reveal due to “sensitivities regarding public disclosure.” He added there had been contact with the Pennsylvania Attorney General’s Office and Delaware County officials.
“It sounds like that it is still being heavily, heavily negotiated or worked on,” Jernigan said. “So, at this point, we’ll just stay tuned.”
Crozer Health has faced an uncertain future for most of the year. Prospect declared Chapter 11 bankruptcy in January, citing $400 million in debt.
In early February, the California-based company received a $20 million taxpayer bailout from Pennsylvania to keep Crozer Chester and Taylor hospitals open.
But special attention has been given to the Foundation for Delaware County (Delco Foundation), a nonprofit formed out of the $50 million sale of the health system to Prospect in 2016.
Although the Delco Foundation contributed $7 million to cover hospital payroll in early March, Gov. Josh Shapiro (D-Pa.) urged it to “step up and actually do something.” He suggested that although the foundation had plenty of money to help Delaware County residents, it was not acting.
Delco Foundation reported having $74 million cash on hand in 2023.
Foundation officials have said they’re trying to save money due to a $30 million lease obligation for office buildings on the Springfield Hospital campus. The lease was supposed to transfer to Prospect after the 2016 sale, but the building owner refused.
The nonprofit has faced questions over its grant allocations and executive salaries.
Documents show Delco Foundation used some grant money for healthcare expenses. Thousands of dollars in grants were used for art and music programs, school supplies, an arboretum, and “to build peace for those impacted by violence” in Chester. Foundation officials defended the donations as following the will of their donors and the expanding definition of healthcare.
Top foundation officials received $764,353 in total compensation. That included a salary of nearly $265 thousand for President Frances Sheehan.
The union representing several Crozer Health employee groups accused the foundation of holding up a deal to keep the health system open. And attorneys for Prospect and its debtors accused Delco Foundation of reneging on $13 million in funding.
The claims stemmed from a lawsuit filed in Pennsylvania by foundation trustee Donald Delson. The suit wanted to keep Delco Foundation from funding “the operation of any hospital or hospitals services.”
The suit was eventually dropped after Jernigan ordered all parties back to the negotiation table.
Delco Foundation eventually agreed to the additional $13 million in funding.
There are claims the health system will eventually be sold to Penn Medicine and Delaware County, along with state funding and “other sources.”
Despite confidence from all sides last week, a deal has yet to materialize.
A Delco Foundation spokesperson told DVJournal they were not involved in the negotiations. “[We] don’t know the status,” said Katy Lichenstein.
Representatives from the Attorney General’s Office and Delaware County said discussions were ongoing between all parties.
The postponed hearing is set for April 3.
