Crozer Health restructures, lays off 215 staff members to address financial woes

Healthcare organisations are currently experiencing considerable losses due to exorbitant labour, drug, and supply expenses in the US that have not been offset by increased payments from insurance providers, ultimately resulting in significant financial deficits. As a result, job cuts have become a widespread solution to this issue.

In a statement, Crozer announced that its recent restructuring efforts, which aim to eliminate redundancy in administrative oversight and discontinue underutilised services, are part of its ongoing efforts to streamline operations. The health system is owned by Prospect Medical Holdings Inc. of Los Angeles.

Crozer has been grappling with financial difficulties since the beginning of last year. A Prospect executive, who held the position before Esposito, attempted to shut down a number of behavioural health and drug-treatment programs, as well as reducing administrative jobs, according to media reports. 

 However, legal intervention from Delaware County resulted in the programs being reopened, causing a significant setback for Crozer. As a result, the health system has faced challenges in regaining its stability.

Crozer's efforts to turn Delaware County Memorial Hospital into a center for inpatient mental health and drug-treatment and Springfield Hospital into an outpatient facility followed a failed attempt by Prospect to sell Crozer to ChristianaCare last summer. However, the Pennsylvania Department of Health ordered Delaware County Memorial's emergency department to shut down due to inadequate staffing. As a result, the facility remains closed, and its future is uncertain due to ongoing litigation.

Nevertheless, these moves helped reduce Crozer's monthly losses from $12 million to $7 million. The health system anticipates that it will break even once all the planned changes are implemented.

Crozer's financial struggles are partly due to the sale of its real estate for $420 million when it was under the management of Leonard Green & Partners. This transaction was part of a $1.55 billion agreement in which Prospect hospitals in three states lease their properties from a real estate investment trust. This sale loaded the hospitals with debt, leading to financial difficulties.

Medical Properties Trust, which is the landlord for the properties, recently wrote off 40% of the $420 million it paid for the Crozer real estate, which amounts to $171 million. Additionally, the trust informed Wall Street analysts that Crozer had not been paying rent.