The sense of hope that hung over hearings last week regarding the future of bankrupt Crozer Chester and Taylor hospitals in Delaware County has given way to a harsh reality: They could begin shutting down as soon as this week if funding isn’t secured by close of business Wednesday.
“It is my strongly held belief that we are not going to reach an APA this week,” said Bill Curtin, an attorney representing the debtors of hospital owner Prospect Medical Holdings. “The reality is we’re not, things have changed.”
Curtin told federal bankruptcy Judge Stacey Jernigan the hospitals would begin shutdown procedures this week if they do not secure another round of funding.
He said all sides were running out of time. “It’s not a question of solving issues. It’s a question of money.”
Judge Jernigan was surprised by the turn of events. She asked how negotiations got to this point when the hospitals received $20 million in funding from the Foundation of Delaware County (Delco Foundation) over the past month.
Curtin blamed the payroll schedule for the latest cash shortage. Negotiations are ongoing, but Curtin didn’t appear hopeful. “We’re still trying to get a positive result, but it’s an incredibly difficult situation,” he said.
Prospect wants $9 million to keep paying employees.
One group that likely will not give more money is Delco Foundation. Curtin said the nonprofit, created out of the sale of Chester Crozer to Prospect in 2016, was up against a financial wall.
“We are tapped out,” said Scott Cousins, the foundation’s legal counsel.
Delco Foundation officials have consistently cited a $30-million lease liability involving hospital buildings. Cousins described it as a “sword of Damocles.”
Jernigan didn’t seem to buy it. “It still seems like there might be a way for you to be part of the solution,” she said.
The judge isn’t the first public official to criticize Delco Foundation’s response to the crisis. The foundation was created with money from the purchase of the nonprofit Crozer-Keystone Health System by Prospect Medical Holdings in 2016. Now it is reluctant to use its resources to support the local hospitals.
Gov. Josh Shapiro (D) suggested the foundation could be part of the solution if leadership decided to “step up and actually do something.”
Delco Foundation reported $74 million cash on hand in 2023.
In court, Cousins swore, “We are not deliberately being stingy.” He said the foundation is “heavily involved” in maternal health in Chester, including housing. He did not mention the thousands of dollars spent on non-health-related projects like art and music programs, school supplies, an arboretum, and a place “to build peace for those impacted by violence” in Chester.
Top foundation officials received a combined $764,353 in total compensation each year. That included a salary of nearly $265,000 for President Frances Sheehan.
One thing the judge pressed was the urgency of the matter. She asked whether all parties involved in a consortium looking to take over Crozer Chester and Taylor hospitals knew the situation was dire.
“This is going to be a disaster if these hospitals don’t stay open,” said Jernigan.
Melissa Van Eck with the Pennsylvania Attorney General’s Office would not reveal who was part of a consortium looking to take over Crozer Chester and Taylor hospitals. Penn Medicine and Delaware County are believed to be part of the takeover group.
Van Eck said much progress has been made, but told Jernigan people “needed to buy in” on the receiver’s plan for the facilities.
A Zoom meeting with all parties is scheduled for Wednesday morning. That includes foundation representatives, following an order by the judge.
Jernigan didn’t seem hopeful. “I want multiple somebodies to be a hero here. But we’re kind of at the end of the road,” she said.
