A Half-Billion Dollar Swindle in Delco Harms Children 

After the private equity owners of the Crozer Medical system in Delaware County extracted more than $500,000,000 from the system over the past nine years, it declared bankruptcy and the whole hospital network was put on life support with public and foundation funds. Meanwhile, parents of young children were given notice that the owners had pulled the plug on children’s health care services. 

It’s deja vu all over again! 

You may not remember when Hahnemann Hospital closed in 2019 after it was bled dry by private equity investors, but the 800 expecting moms who were being cared for by Hahnemann physicians will never forget. Especially since those investors, Tenent Healthcare, were wealthier after the closure while the babies and their parents lost access to pre-, post-natal and OB care. 

Hahnemann was one of 13 Philadelphia hospitals with maternity units that shut down between 1997 to 2012, likely contributing heavily to the 50% spike in infant mortality by 2014. To this day, Philadelphia’s infant mortality rate is nearly 40% higher than the national rate.  

Crozer’s closure is being driven by the same craven private equity model that starved Hahnemann dry. But Prospect Medical Holdings’ plunder of the Crozer health system could easily do more harm to children than the Tenant private equity debacle caused in Philadelphia. 

Case in point, Crozer was the only hospital with a pediatric ward in the entire county. It was also the only hospital with behavioral health services for children and their parents in the county. Dr. Betsy Race, a local pediatrician, expressed her well-informed fears to us, “Obtaining care is becoming complicated especially for pregnant moms and newborn babies, those with emergency behavioral health issues, and those needing emergency care may face delays that can impact their outcomes.”

Already Crozer’s obstetrics patients are stuck because they can’t get into other practices locally because those practices are full. Imagine an expectant mother’s stress of not knowing where she’s going to deliver her baby, and the emotional and financial ordeal of ending up in an emergency department for delivery!

If a child needs to be admitted to a hospital, now there is an added burden on the parents because Delco had only 1.3 hospital beds per 1,000 people before the closure, way below the state average of 2.3 hospital beds per 1,000 people.

So, what have we learned from these two failed experiments of marrying private equity practices to health care? A lot, like “If something sounds too good to be true, it is.” As Prospect cranked up its ambitious expansion plans (to purchase financially strapped hospital systems), it consistently told government regulators and the public, “We haven’t closed hospitals, and we don’t close services.”

Yet, now they’re leaving town, forcing state and county lawmakers, and essential local philanthropies like the Foundation for Delaware County to pay the tens of millions of dollars needed just to make weekly payroll for a stripped-down version of what used to be a vibrant health enterprise.  

To be clear, there may be a role for private equity investments in some parts of the economy. But the track record of private equity “solutions” for financially strapped non-profit hospital systems is so replete with financial and moral failures that we need to hit the pause button. Failing to do so puts children’s health at an alarming risk.